Insurance Business America issue 6.03

IBAMAG.COM ISSUE 6.03 | $12.95

REPUTATIONAL RISK

A reputational crisis can sink a company – here’s how to protect your clients

BUILDING BUSINESS

Where do opportunities lie for brokers in the construction space in 2018?

TERRORISM COVER

Cutting-edge policies offer a new way to guard against the latest threats

SURVIVE AND THRIVE Hyperion Insurance Group CEO David Howden on what the insurance industry must do today to prepare for tomorrow SPECIAL REPORT: FIVE-STAR WHOLESALE BROKERS AND MGAs

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ISSUE 6.03

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CONTENTS

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UPFRONT 04 Editorial

Politics before policies?

06 Head to head

Assessing Amazon’s potential impact on insurance

08 Statistics

Which risks are top of mind for businesses around the world in 2018?

FEATURES

THE TERRORISM THREAT

As terrorists shift tactics, insurers are stepping up to keep businesses protected

10 News analysis

Social media has escalated the significance of reputational risk

12 Intelligence

This month’s big movers and shakers

14 Workers’ comp update

How predictive modeling can drive workers’ comp business

16 Technology update SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

Producers reveal which wholesale brokers and MGAs consistently deliver top-notch service

PEOPLE

INDUSTRY ICON

FEATURES

SUCCEEDING AS AN EMPLOYER OF CHOICE

Acentria Insurance’s Kendall McEachern reveals how he fosters an award-winning company culture

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Hyperion Insurance Group’s David Howden offers a winning formula for future success

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23 Opinion

Attracting millennials isn’t the only solution to the looming talent crisis

FEATURES 58 What to change about your business in 2018

Three updates every business owner should undertake this year

60 Say no to dull meetings

You don’t need to have fewer meetings – you just need to have better ones

PEOPLE 63 Career path

Josh Ladeau’s journey from internet neophyte to cyber insurance expert

64 Other life FEATURES

AN INDUSTRY ON THE RISE

Construction specialists share their outlook for the industry in 2018

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Emerging technology could make brokers more important than ever

Wedding singer Ben Guttman livens up the party

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Put partners first.

We do.

Collaboration with partners to take their business to the next level.

Partnerships that span 35 years.

E&S/Specialty nationwideexcessandsurplus.com A.M. Best rating of A+ (Superior), FSC XV Fortune 100 company Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. Š2018 Nationwide

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UPFRONT

EDITORIAL

When insurance meets politics

A

s an insurance broker, what are your key considerations when recommending an insurer to a client? The most comprehensive coverage?

The best deal? The cheapest price? Or how about politics?

How much should your political beliefs dictate your approach to business?

That’s a question many brokers may be asking themselves after two giants of the sector, Chubb and Lockton, chose to distance themselves from the National Rifle Association in the wake of the Parkland, Florida, school shooting that claimed the lives of 17. Chubb stopped underwriting the NRA’s Carry Guard program, while Lockton stopped selling products with an NRA endorsement.

The reaction on the IBA website fell on both sides of the political divide.

“I’m happy to hear Lockton, Chubb and other companies are taking a stand against the NRA’s manic desire to arm America with no consideration to safety

If you disagree with an insurer’s stance on an issue such as gun control or coal support, should that influence the recommendations you make to clients? and common sense,” wrote one reader on the forum. “An unstable teen shoots up a school, so let’s pull the insurance for the program that offers protection to gun owners who shoot in self-defense?” wrote another. “One has nothing to do with the other.”

Gun control is, of course, a highly divisive issue in the US, but it’s not the only political minefield that has seeped into the industry recently. In Europe, insurers such as Allianz and Generali have come under fire for underwriting Polish coal companies after ClientEarth sent a letter to Lloyd’s of London CEO Inga Beale calling for a rewrite of the market’s rulebook so that members do not invest in or insure coal-related firms and undertakings.

Therein lies something of a moral dilemma. If you disagree with an insurer’s stance on an issue such as gun control or coal support, should that influence the recommendations you make to clients? Or, if that particular insurer continues to offer the client the best policy for their needs, should politics be left out of the equation?

In Marsh’s 2018 Political Risk Map, the brokerage giant concluded that trade protectionism, Brexit and a host of elections in Latin America will make political risk a major concern for businesses this year. For insurance companies, it seems, that risk might strike even closer to home.

The team at Insurance Business America

www.ibamag.com MAY 2017 EDITORIAL Managing Editor Paul Lucas Journalists Alicja Grzadkowska, Lucy Hook, Jordan Lynn, Bethan Moorcraft, Ryan Smith News Writers Lyle Adriano, Krizzel Canlas, Terry Gangcuangco, Mina Martin, Gabriel Olano Staff Writers Tim Garratt, Hannah Go, Libby Macdonald, Joe Rosengarten, Heather Turner Copy Editor Clare Alexander

CONTRIBUTORS Sharon Emek, Stephen Barnes, Matt Malouf

ART & PRODUCTION Designer Joenel Salvador Production Manager Alicia Chin Traffic Manager Ella Dayandante

SALES & MARKETING Vice President John Mackenzie Media Sales Managers Chris Wills, Chris Anderson, Desiree McCue, Megan Roth Mktg & Comms Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

Editorial Inquiries paul.lucas@keymedia.com Subscription Inquiries subscriptions@keymedia.com Advertising Inquiries chris.wills@keymedia.com, chris.anderson@keymedia.com, desiree.mccue@keymedia.com, megan.roth@keymedia.com

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Insurance Business America is part of an international family of B2B publications and websites for the insurance industry Insurance Business Canada john.mackenzie@kmimedia.ca T +1 416 644 874O Insurance Business UK nathan.beach@keymedia.com T +44 20 7193 0935 Insurance Business Australia peter.smith@keymedia.com.au T +61 2 8437 47OO Insurance Business NZ peter.smith@keymedia.com.au T +61 2 8437 47OO Insurance Business Asia peter.smith@keymedia.com.au T +61 2 8437 47OO Printed in Canada Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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your Future Is Here SIAA provides the resources to help existing and start-up agencies succeed today and in the future.

Strong and Competitive Companies • Quarterly National Incentives Regional/Local Profit Sharing • Marketing Resources Training & Learning • Commercial Lines Training Start-up Agency Training • E & S and Specialty Programs

To learn how we can help you increase your agency income and value, contact us today. info@siaa.net | www.siaa.net

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UPFRONT

HEAD TO HEAD

How would Amazon entering the industry affect brokers?

The online retail giant has started making moves toward offering insurance. Is this potential disruption a pro or con for brokers?

Geoff Stooke

Deepak Soni

Managing director Modern Risk Solutions

Director of commercial intermediary AXA Insurance

“My business would look forward to the prospect of working with Amazon on highly customized insurance solutions for clients across the technology sphere. Most of our clients are technology-enabled and have existing relationships with Amazon through Amazon Web Services [AWS]. In that space, Amazon has been a proven provider of affordable virtual servers that offer scale and active customer and managed services.

I am also enamoured of the fact that Amazon has a history of intermediating their services in AWS through their Amazon Partner Network – perhaps Amazon would intermediate their insurance distribution through such partnerships.”

“Both brokers and insurers, especially volume-based personal lines providers, could be impacted by Amazon’s possible entrance into the insurance market.

Amazon is renowned for cutting the cost of products and distribution and taking a customer-centric approach built on trust, transparency and convenience, and that is an approach the insurance industry needs to focus on.

Any move by Amazon into the industry should be seen as an opportunity. Tough competition, especially from a company with a strong track record, is an opportunity for us to look at our own operating models and how we can evolve in the future.”

Scott Guse

Partner, audit assurance and risk consulting KPMG “When you hear the word ‘Amazon,’ you immediately think disruption. I may be going out on a limb here, but I don’t think Amazon’s entrance to the insurance market will cause any major issues for brokers.

A broker’s clients are not retail clients, which are an easier insurance sell; they are SME and larger corporates. Provided the broker is doing their job properly – advising, assisting and adding value to their clients – I would expect their clients will remain loyal.

The retail/direct insurers … well, that’s a different question. Yes, it will certainly impact them.”

APPETITE FOR DISRUPTION Speculation abounds about Amazon’s designs on the insurance industry after the online retailer announced a partnership with Berkshire Hathaway and JPMorgan Chase to provide health coverage to the three companies’ US employees. The announcement came on the heels of reported plans by the tech giant to invest in India-based insurtech startup Acko, as well as its recruitment of insurance professionals in London. Any entry into the insurance market by Amazon is likely to equal disruption, according to Capgemini EVP and insurance lead Seth Rachlin. “There’s no digital property that is more pervasive from a retail perspective than Amazon,” he told Insurance Business America late last year. “If they do something beyond [their] warranty business, then it’s likely to be disruptive because people will notice and pay attention.”

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COMPLEX RISKS REQUIRE SPECIALIZED SOLUTIONS 1

Commitment to Superior Solutions

21

Managing General Underwriting Companies

80

Lines of Business

290

Years of Collective Operating Longevity

21 MGU COMPANIES STRONG

RIMS BOOTH 2347

Capital Bay Underwriting | Concord Specialty Risk | CorPro | CorRisk | EmergIn Risk | Global Special Risks | Hunter George Interstate Insurance Management | Irwin Siegel Agency | LifeScience Risk | Power Energy Risk (PERse) | RSG Denmark RSG Sweden | SafeWaters Underwriting Managers | Sapphire Blue | StartPoint Executive Risks | Technical Risk Underwriters ThinkRisk |Trident Marine Managers | Windward Specialty | WKFC Underwriting Managers | www.ryansg.com/rsgum

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UPFRONT

STATISTICS

Top business risks in 2018

Canada 1 Business interruption 2 Cyber incidents 3 Natural catastrophes

Business interruption and cyber threats top the list of risks for companies around the globe US THE POSSIBILITY of business interruption ranks as the most important risk faced by businesses across the globe: 42% of companies surveyed by Allianz for its latest Global Risk Barometer were concerned about the potentially disastrous effect on revenues bought about by a disruption in day-to-day commerce.

While business interruption has topped the list for six years in a row, cyber incidents are

$2 million+

Average cost of a business interruption property insurance claim for a large company

10%

Increase in respondents who named cyber incidents as their top concern

now the second biggest threat to businesses worldwide; 40% of companies named cyber threats as their chief risk. This represents a major shift: As few as five years ago, cyber incidents ranked number 15 on the Global Risk Barometer. Rounding out the top three is another risk that’s closely linked to business interruption and was particularly pronounced in 2017: natural catastrophes.

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Countries in which cyber incidents ranked as businesses’ top risk

$135 billion Global amount of insured losses from natural catastrophes in 2017

1 Cyber incidents 2 Business interruption 3 Natural catastrophes

A WORLD OF RISK The possibility of business interruption looms large across a variety of regions; many companies across the globe named it first or second on their list of concerns. For the first time this year, companies said cyber incidents were the most likely trigger of business interruption, which helps explain its rise in prominence to one of the top three concerns for most companies.

Source: Allianz Risk Barometer: Top Business Risks for 2018

TOP 10 RISKS

THE COST OF BUSINESS INTERRUPTION

Along with cyber incidents, other risks that jumped in importance this year include new technologies, loss of reputation and climate change.

Business interruption can emanate from many sources – companies named cyber incidents, fire/explosion and natural catastrophes as their top three most feared triggers – but all such incidents take a toll on revenues, as they can easily cost a company millions of dollars.

Business interruption

AVERAGE VALUE OF A BUSINESS INTERRUPTION CLAIM

Cyber incidents Natural catastrophes Market developments Changes in legislation and regulation Fire, explosion New technologies Loss of reputation or brand value

$4.5 MILLION Strike/riot/vandalism*

$5 MILLION

Source: Allianz Risk Barometer: Top Business Risks for 2018

8

Flood

Energy platform incident*

$900,000

Political risks and violence Climate change/increasing volatility of weather

$1.4 MILLION

Storm

*These incidents are low-frequency/highseverity events

$2 MILLION Fire, explosion

Source: Allianz Global Corporate & Specialty

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Germany

UK 1 Cyber incidents

1 Business interruption

2 Changes in legislation and regulation 3 Business interruption

2 Cyber incidents 3 Natural catastrophes

Italy

France 1 Business interruption

1 Business interruption

2 Cyber incidents

2 Cyber incidents

3 Fire, explosion

3 Natural catastrophes

Japan 1 Business interruption

China

2 Cyber incidents 1 Business interruption

Spain

South Africa

1 Business interruption 2 Natural catastrophes 3 Fire, explosion

3 New technologies

2 Cyber incidents 3 New technologies

1 Cyber incidents 2 Business interruption 3 Changes in legislation and regulation

Australia 1 Cyber incidents

Risk higher than in 2017

2 Business interruption

Risk lower than in 2017

3 Changes in legislation and regulation

No change from 2017

TOP THREE BUSINESS RISKS BY COUNTRY Source: Allianz Risk Barometer: Top Business Risks for 2018

CYBER CONCERNS

RISKS OF THE FUTURE

Despite a constant stream of headlines about data breaches, 54% of companies surveyed by Allianz named cyber incidents as the most underestimated risk facing businesses in 2018. A data breach can impact a company in numerous ways, from business interruption to reputational damage.

The top risks companies expect to face over the next decade underline the growing importance of technology in the modern world.

MAIN CAUSES OF ECONOMIC LOSS AFTER A CYBER INCIDENT

WHAT WILL BE THE TOP THREE RISKS TO BUSINESSES IN THE NEXT 10 YEARS?

50%

Business interruption

40% 30%

Reputational loss

20% 10%

Liability claims

0%

0%

10%

20%

30%

40%

50%

60%

70%

Source: Allianz Risk Barometer: Top Business Risks for 2018

48%

26%

24%

Cyber incidents

New technologies

Climate change/ increasing volatility of weather

Source: “Allianz Risk Barometer: Top Business Risks for 2018

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UPFRONT

NEWS ANALYSIS

The risk of a reputation A maelstrom of social media, high stakeholder expectations and public discontent is driving the frequency and severity of reputational crises – and the insurance industry itself is not exempt DUE IN NO small part to the power of social media, both individuals and organizations are increasingly held to account for their actions by the public in today’s world.

Now that the average consumer has a smartphone in their pocket, they also have platform with which to share their grievances with the world – which can be bad news when it comes to companies’ public relations. In an age when an incident can quickly become a viral sensation, organizations are finally waking up to the reality that a reputational crisis is always just a tweet away.

Alongside traditional operational risks such as mis-selling, poor product design and failure to protect customer rights or data, businesses today face wider-reaching cultural and societal challenges, too.

This was driven home in 2017, in which a

reasons after a video emerged of a passenger being dragged off an overbooked flight.

Perhaps most notably, Hollywood heavyweight film studio The Weinstein Company became embroiled in what has since become a major social movement when dozens of sexual assault and misconduct accusations emerged against its now-disgraced co-founder, Harvey Weinstein.

The prospect of a reputational crisis today means more than just bad PR, though – it is likely to impact a company’s bottom line. In the five years leading up to 2016, reputational insurer Steel City Re found a 461% increase in corporate reputation-related losses.

The growth in the overall frequency and severity of reputational losses has been driven by three factors, according to Steel City Re CEO Dr. Nir Kossovsky. The increasingly

“Reputational risk – because it is linked to expectations and is triggered by disappointment – can emerge suddenly” Nir Kossovsky, Steel City Re number of major brand names encountered significant reputational crises. Pepsi was forced to pull a commercial starring model Kendall Jenner after it was accused of trivializing the Black Lives Matter movement.

United Airlines went viral for all the wrong

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high expectations of stakeholders (resulting in a progressively low tolerance of failure), the rise in the use and ability of social media to spread both true and false stories, and a growing sense of anger and disappointment among the general populace are all creating

a breeding ground for reputational disasters.

Social media in particular has the power to greatly accelerate change, and it’s being used as a “powerful weapon against companies, industries and individuals when they become targets,” Kossovsky says.

Insurance companies themselves have not been exempt from being drawn into controversy. Following the February school shooting in Parkland, Florida, that left 17 people dead, a number of corporations cut ties with the National Rifle Association, including insurance giants Chubb and Lockton.

Chubb revealed it would stop underwriting NRA Carry Guard, a branded insurance policy for NRA gun owners, though it said the decision was made months before the Parkland shooting. Lockton followed with an announcement that it would no longer sell products with an NRA endorsement.

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REPUTATIONAL RISK

BY THE NUMBERS

461%

Increase in corporate reputation-related losses between 2011 and 2016

40%

Proportion of US millennials who say they will avoid United Airlines following the passenger removal controversy that erupted in April 2017

Less than 24 hours

Time that elapsed before Pepsi pulled its controversial ad starring model Kendall Jenner following a social media backlash Sources: Steel City Re, Morning Consult, LendEdu, Vox.com

“Lockton Affinity has notified the NRA that it will discontinue providing brokerage services for NRA-endorsed insurance programs under the terms of its contract,” the broker said in a tweet.

was allegations of unethical and inappropriate executive behavior that gained prominence through #MeToo,” Kossovsky says. “At this particular moment, it is the NRA. For corporate leaders responsible for protecting the

“Reputation harm insurance ... covers the temporary loss of income while an organization recovers [from a breach]” Jeremy Barnett, NAS Insurance Services According to Kossovsky, companies are acting now because “the fear of economic harm by angry or disappointed stakeholders – what we call reputational risk – is much greater.

“Earlier this year, the top reputation risk

assets of a firm, the lesson is that reputational risk – because it is linked to expectations and is triggered by disappointment – can emerge suddenly with shifts in culture.”

As technology continues to advance at rapid speed, cyberattacks and cyber-

crime can also present reputational risks for organizations. As a result, some insurance carriers now offer coverage for financial losses suffered as a result of cybercrime.

Responding to a cyberattack can be costly and time-consuming, which can result in a serious domino effect on a business’s bottom line.

“Reputation harm insurance not only helps cover the cost of a breach, but also provides funds to cover the temporary loss of income while an organization recovers,” says Jeremy Barnett, senior vice president of marketing at NAS Insurance Services.

The message to businesses is clear: In today’s world, a reputational crisis can mean more than just some bad publicity. According to Kossovsky, economic damage from a reputational crisis “can be as great as the damage from a sudden tornado.”

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Associated Benefits and Risk Consulting

Diversified Insurance Solutions

The acquisition will position ABRC among the top 45 insurance brokerages in the US

Gallagher

Williams Insurance Agency

South Dakota-based Williams Insurance Agency offers P&C, health, life and voluntary benefit coverages

HUB International

Der Manouel Insurance & Financial Services

California-based DMIG is a multi-line insurance brokerage with roots in niche P&C programs

HUB International

IPS Advisors

IPS Advisors is an independent life and health benefits brokerage and consulting firm based in Texas

HUB International

Pointbreak Consulting Group

Pointbreak is an employee benefits and pension consulting firm

Marsh & McLennan Agency

Highsmith Insurance

Highsmith offers insurance and bond products to mid-sized employers and individuals in the Mid-Atlantic region

NSM Insurance Group

TranSpec

TranSpec is a Tennessee-based broker specializing in transportation insurance

Ryan Specialty Group

Lodestar Marine

Lodestar is a leading MGA in the P&I fixed-premium marine market

Ryan Specialty Group

New Day Underwriting Managers

New Day will become part of R-T Specialty, RSG’s wholesale brokerage

Senior Advisory Group

The deal will allow Seeman Holtz to expand its reach in the financial and retirement services markets

Seeman Holtz Property & Casualty

Ryan Specialty Group continues acquisition streak Ryan Specialty Group is on a hot streak of acquisitions. The company announced a deal to purchase Lodestar Marine in early February, shortly after it finalized its acquisition of New York-based Kerwick & Curran. RSG closed the month by announcing an agreement to buy New Day Underwriting Managers, a New Jersey-based firm with a strong focus on environmental liability and construction-related professional liability.

“It is the perfect time at New Day to join forces with the powerhouse of R-T Specialty,” said New Day CEO Jefferey S. Lejfer. “Our national footprint will blend well with R-T’s extensive network, and our expertise will further complement R-T’s robust expertise in the construction and real estate industries.”

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QBE adds data breach planning to cyber offering

QBE North America has announced it will include data breach planning services in all of its cyber policies. The firm will initially offer the services through Breach Plan Connect as part of The Solution for Cyber Risk, its comprehensive cyber risk product suite. This will give customers the ability to access the plan whenever needed in response to a cyber event. “Embedding this product in our cyber policies will ensure that our policyholders will have the tools they need when they are at their most vulnerable moments,” said Steven Anderson, VP of underwriting at QBE.

Partnership designs industryfirst suicide protection

Atlanta Life Insurance Company, a subsidiary of Atlanta Life Financial Group, has announced a new partnership with Altium Insurance Services, a New Jersey-based specialty insurance protection product design firm. The partnership has designed an industry-first insurance coverage that protects corporate or partnership beneficiaries from the suicide exclusion clause written into all key man life insurance policies.

If a death claim is denied by an insurance carrier due to the suicide of the insured key executive within the 24-month contestable period, this product will provide payment to the third-party beneficiary.

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PEOPLE Hiscox expands coverage for mental health practitioners

Hiscox has announced new coverages in its specialized insurance policy for mental health businesses. The product, Hiscox PRO Outpatient Mental Healthcare Professional Liability, covers a wide range of risks, including billing and regulatory errors, sexual abuse and misconduct, HIPAA liability, and coverage for remote therapy services. “We considered the unique exposures of the latest treatments and offerings in this space and designed a policy that provides greater coverage for companies on the cutting edge of this evolving industry,” said Hiscox VP Alicia Marsiglia.

Y-Risk to offer cyber and tech E&O through Lloyd’s

Specialty underwriting management company Y-Risk has been approved as a Lloyd’s coverholder to offer cyber and technology E&O insurance. Y-Risk’s Y-ProTech insurance policies provide coverage against first- and third-party cyber losses and technology E&O liability exposures, and will be offered to small and medium businesses. The first specialty offering in the suite, Y-ProTech for Marketplaces, is “the only cyber and E&O policy in the industry exclusively focused on companies in the sharing and on-demand economies,” according to Y-Risk.

Travelers revamps homeowner’s insurance

Travelers has launched a new homeowners’ insurance product called Quantum Home 2.0, which features tailored pricing, more flexible coverage options and simplified documents. “We partnered with our agents to develop QH2.0, and the result is a completely redesigned product that provides greater customization, fewer steps to complete a quote and simplified customer communications,” said Michael Klein, EVP and president of personal insurance at Travelers. “This new product will increase efficiency for agents while helping them to deliver better service and drive new business.”

NAME

LEAVING

JOINING

NEW POSITION

Sheila Anderson

N/A

Liberty Mutual Insurance

Corporate functions chief information officer

Kevin Bradicich

McKinsey & Company

The Hanover Insurance Group

Board member

Donna DeMaio

N/A

AIG

Global COO, general insurance

Brian L. Eighmy

Arch Insurance Group

Innovative Coverage Concepts

Director of claims

Ben Fox

Ontario Teachers’ Pension Plan

Hiscox Re Insurance Linked Strategies

Portfolio manager

David McLaughlin

Fiserv

Hiscox

Chief financial officer, US

Mark Moitoso

Liberty Mutual

Lockton Companies

Executive vice president and risk practices leader

Chris Reisdorf

All Risks Ltd.

Smart Choice

North Carolina state director

Benjamin Rowley

Hiscox

Chubb

Senior underwriter of financial lines, Chubb Global Markets

Benjamin A. Siddons

Redpoint Workers’ Comp

Texas Mutual Insurance Company

Vice president of business development

George Vogle

Swett and Crawford

Worldwide Facilities

Senior vice president

ICC taps claims expert as new director of claims

National wholesale broker and MGA Innovative Coverage Concepts [ICC] has appointed industry veteran Brian L. Eighmy as its new director of claims. Boasting 20 years of experience in claims management, Eighmy previously served as assistant vice president of Arch Insurance Group’s major case unit prior to joining ICC; in that role, he oversaw Arch’s most severe claim situations.

“The management and resolution of complex claims remains a priority for all our clients and partners,” said ICC president and CEO Dean Carras.

“Brian is a proven leader with an outstanding track record in all areas of claims advocacy and management.”

Texas Mutual names VP of business development

Texas Mutual Insurance Company has appointed Benjamin A. Siddons as vice president of business development. In his new role, Siddons will be responsible for bringing in new business to Texas Mutual, in addition to developing and implementing sales strategies.

Siddons has more than 15 years of insurance experience, seven of which have been spent in the workers’ compensation space. He was most recently the president of Redpoint Workers’ Comp; he has also previously served as director of business development for American Physicians Insurance Company and as a producer for an Austin-based insurance agency.

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UPFRONT

WORKERS’ COMP UPDATE NEWS BRIEFS ChronWell seeks to disrupt the workers’ comp space

Insurtech startup ChronWell is poised to disrupt the workers’ comp system after raising $4.5 million to launch an AI-powered platform that will provide triage and technology-enabled services to better serve injured workers and get them back to work faster. “Our mission is to use technology to bridge the gap between employee, employer and insurance company,” said ChronWell CEO and co-founder Joe Rubinsztain. “In making the process more efficient, we will improve outcomes and help injured workers receive the care they deserve.”

Injured trolley driver set up attack to draw benefits

A Massachusetts trolley driver who was attacked by what appeared to be a pumpkin-wielding maniac on Halloween in 2016 has been charged with attempting to commit insurance fraud after police identified a flaw in his mastermind plan. The masked assailant who attacked Massachusetts Bay Transportation Authority driver Thomas Lucey with a plastic pumpkin left the pumpkin behind, and police were able to lift a fingerprint from it and identify him.

According to a local CBS affiliate, the attacker revealed that Lucey had paid him $2,000 to be beaten so that he could fraudulently collect workers’ comp and disability insurance benefits.

NFL star gets jail time for million-dollar fraud scheme

Former NFL star Marcus Buckley has been sentenced to two years in federal prison for participating in a milliondollar insurance fraud scheme. Buckley played football for the New York Giants from 1993 to 2000. Between 2010 and

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2011, Buckley filed multiple fraudulent claims with Pennsylvania Manufacturer’s Association Insurance Group for injuries allegedly sustained while he was playing for the Giants. He used phony statements and medical bills to back his claims, ultimately receiving more than $1.58 million from the fraud.

Ohio lowers workers’ comp premium rates for 2018

Workers’ compensation premium rates are set to fall 12% in Ohio starting on July 1. The cut was confirmed by the Ohio Bureau of Workers’ Compensation [BWC] board of directors, which said the reduction is likely save private employers in Ohio $163.5 million this year. A changing workforce, safer workplaces, slow growth in medical inflation and fewer claims are some of the factors credited with the reduced rates, according to BWC administrator and CEO Sarah Morrison. “BWC has also increased efforts to promote safe workplaces, and employers are recognizing that investing in safety is good business,” Morrison added.

Iowa legislators approve new workers’ comp fraud unit

Iowa’s Senate has approved the formation of a new unit with the sole purpose of investigating fraudulent workers’ compensation claims. If it passes the House of Representatives and is signed into law, the new unit would have an in-house prosecutor, as well as other investigators. Senator Jake Chapman, a Republican from Adel, told Radio Iowa: “This is not a victimless crime. Every time someone commits fraud, we pay for it … in increased costs of premiums or increased costs of goods and services.” The bill did not set aside any money for creating the new investigative unit.

Predicting the future in workers’ comp One insurer is expanding its workers’ comp book of business through the use of predictive modeling The ebb and flow of premium rates in the American workers’ comp system is constant.

Each state, plus the District of Columbia, has the administrative ability to steer rates up or down – and they steer frequently.

As a result, workers’ comp insurers are under constant pressure to anticipate rate changes and adapt their offerings accordingly, which makes it hard for insurers to innovate with differentiating business strategies. Also part of the equation are new carriers entering the workers’ compensation space, a softening market and a prevalence of legacy systems, all of which have made it difficult for insurers to grow their books of business.

To gain an upper hand, Utah Business Insurance Co. [UBIC] has turned to predictive modeling. The workers’ compensation insurer recently implemented the Valen Analytics InsureRight Platform to modernize its underwriting capabilities and grant its underwriters greater visibility and efficiency in risk selection and pricing. The predictive model will enable UBIC to increase profitability, improve bind ratios and target new business opportunities.

“We were seeking ways to improve our underwriting processes so that we can be more effective and efficient,” says Tyler Nielsen, UBIC’s VP of operations. “It became clear when we were researching predictive models that UBIC, as a relatively small insurance carrier, did not have quite enough data to build our own model.

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“We needed a company with the experience and the data consortium that could supplement our own data in order to make a model predictive,” he adds. “Valen Analytics had the industry experience, knowledge, customer service and the data to help us achieve what

has carved out a niche in the workers’ compensation market and is turning massive amounts of data into actionable results. Insurers can use its platform to supplement and speed up their existing policy administration systems, Nielsen explains.

“Some people ... are afraid that if we all implement predictive models, it will result in a mass race to the bottom and damage the profitability of the industry. That shouldn’t be the case if companies use customized models” we want to achieve – growth of our workers’ compensation business.”

Like UBIC, other workers’ compensation insurers throughout the US are starting to tune into the buzz of Big Data. Valen Analytics

“Customized workers’ compensation predictive models enable each individual company to work their own objective,” he says.

“Some people in the workers’ compensation industry are afraid that if we all implement

predictive models, it will result in a mass race to the bottom and damage the profitability of the industry. That shouldn’t be the case if companies use customized models to match their specific needs and business intentions.

“We wanted to increase our book of business in certain ways,” he adds, “so we told Valen what our intended goal was, and they provided us with a model that would help us grow.

Predictive modeling is not just about pricing – it’s much more interesting than that.”

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16/03/2018 9:33:36 PM

UPFRONT

TECHNOLOGY UPDATE

Brokers’ role in the Internet of Things era A complex landscape of IoT-driven products will only highlight the importance of using a broker

potentially disruptive technology,” Wargin says.

“The technology that has come into play and is threatening the value of intermediary distribution channels is primarily in the simpler lines of insurance business, such as auto or home insurance, where insureds have a pretty good understanding of what they need. There are plenty of sources that enable self-education on these simpler products as well.”

“[Buyers are] going to rely on insurance brokers to sift through these niche products”

The Internet of Things [IoT] is gracing the insurance industry with a brand-new data set that is enabling carriers and brokers to become more creative with the coverages they offer and the value-added services they can provide.

At present, the industry is only “scratching the tip of the figurative iceberg” with regard to IoT and technological capabilities, according to Jeff Wargin, vice president of product management at Duck Creek Technologies.

NEWS BRIEFS

Some insurance professionals are excited by this new frontier, but others – notably those in the intermediary distribution channels – have expressed concern about the disruptive possibilities of the industry’s new focus. But as IoT and technology enable insurance carriers to become more creative with their product lines, the need for a translator – the broker – could actually increase. “[Insurance intermediaries’] advisory role will always have value, despite the rise of

Deep-learning drone takes flight for property inspections

Loveland Innovations has unveiled its latest development for insurers and adjusters: a deep-learning engine for drone-based inspections. The beta version of Loveland’s IMGING Detect uses deeplearning AI, allowing drones running on the system to ‘learn’ as they gather more data, making them more sophisticated and accurate each time they are used. According to Loveland, IMGING’s proprietary damage detection algorithms are “the most advanced currently available to the drone-based roof, building and property inspection space.”

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But when it comes to niche and specialized insurance products or complex risktransfer and -mitigation needs, Wargin says there’s not yet technology in the marketplace that is poised to disrupt traditional intermediary channels.

“If you start to climb the production chain from simple commoditized insurance products to the more unique and complex solutions carriers are coming up with, the end customers are going to need brokers more than ever,” he says. “IoT and Big Data are going to proliferate the types of products and services that are available, and therefore set the buyer further back with regard to confusion in the marketplace. They’re going to rely on insurance brokers to sift through these niche products, understand them and translate them.”

Flyreel launches AI underwriting platform

Insurtech startup Flyreel has launched an AI-powered underwriting platform. Powered by Microsoft Azure, the underwriting assistant helps insurers and brokers create detailed reports and home valuations, allowing them to make quick, accurate underwriting decisions and offer better coverage and pricing to customers.

“Our AI-powered platform guides the end user through the property inspection and underwriting processes for commercial and residential properties in a friendly and simple way,” said Flyreel CEO Cole Winans.

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16/03/2018 1:47:51 AM

UPFRONT

TECHNOLOGY UPDATE Q&A

Heather Cherry AgencyBuzz product manager INSURANCE TECHNOLOGIES CORPORATION [ITC]

Years in the industry 3 Fast fact ITC updated Agency Buzz last year by adding multiple filters that allow users to target a marketing campaign based on several data points

Why you should automate your agency’s marketing What is ITC’s AgencyBuzz, and why should insurance brokers be interested in it?

How can automated agency marketing help brokers attain clients and generate referrals?

AgencyBuzz is an automated agency marketing system that specializes in email marketing to increase closing ratios and improve client retention by keeping agents in front of their prospects and clients through consistent, personal communication. AgencyBuzz also provides additional digital marketing solutions such as social media, print mail, voice and SMS.

Automation allows insurance professionals the unique opportunity to create immediate dialogue with clients through highly targeted, extremely relevant marketing messages. For example, an agency can use ITC’s AgencyBuzz to send out a multi-message email campaign to clients two weeks after they purchase a policy with information about a referral program.

This type of campaign sends relevant information with the right language to clients at a time when they have had more interaction with the agent and are more likely to refer the insurance agency to friends and family.

By delivering the right message to the right person at the right time, brokers can customize client communication and generate a more personalized customer experience, which leads to brand advocates who consistently – and publicly – tout your insurance agency.

What’s the secret to successful marketing?

Insurance professionals should remain open and flexible to the ever-changing marketing landscape. It’s important for the insurance industry to not only keep up with these advancements, but also to thrive in the new digital environment.

What are the benefits for insurance professionals who maintain a strong social media presence?

In a market flooded with insurance agencies, a strong social media presence can help insurance professionals stand out. Consistent social posting with real-life photos can foster meaningful commentary on your page and show the public who your agency really is.

By using an automated agency marketing tool with a social media component like AgencyBuzz, insurance agents can schedule these posts in advance to help plan an effective social media strategy that enhances their social media presence.

Erie Insurance partners with Roost for home sensors

Home telematics provider Roost has announced a partnership with Erie Insurance, one of the nation’s largest homeowner’s insurers. Erie will use Roost’s Smart Water Leak and Freeze Detector product to test customer engagement with the device to prevent water damage claims.

The Wi-Fi-enabled detector can be set up in leak-prone areas of the home in less than five minutes. “We look forward to learning more from our pilot to further protect our customers,” said Bob Buckel, vice president of personal lines at Erie Insurance.

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How have consumer preferences changed with regard to marketing in recent years?

With the introduction of mobile devices, consumers have come to expect immediate, personalized, aroundthe-clock interaction with the brands they do business with. They want confirmation emails in their pockets within minutes of a purchase and instant responses to any feedback or questions they submit to your website or social media platforms. It’s important for insurance agencies to rise up to overcome the challenges raised by this on-the-go mentality through personalized automated agency marketing.

In-Fi teams with Wela to offer website chatbot

Insurance agency management company In-Fi has joined forces with fintech firm Wela to add a chatbot, Benjamin, to its website. Benjamin will be used to assess website visitors’ insurance needs, and to assist In-Fi in reviewing applications, cross-selling and providing communication management. “By automating an otherwise mundane application process for insurance customers, our agents will be able to spend more meaningful, consultative time with clients and prospects,” said In-Fi partner Jon Chasteen.

Trov secures approvals ahead of nationwide launch

Insurtech company Trov has secured approval to operate in 38 states, including, most recently, Colorado, Connecticut, Maryland, Minnesota, Missouri and Vermont. The ‘on-demand’ insurance company – already in business in Australia and the UK – is preparing for a full launch in the US this year by securing approval across the various states.

Trov’s plans for global expansion are also underway; the company is currently eyeing Canada, Germany and Japan as potential markets.

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16/03/2018 9:22:42 PM

PEOPLE

INDUSTRY ICON

CREATING A TITAN Hyperion Insurance Group CEO David Howden shares how he turned a small business into a global empire and offers some advice on what it will take to survive in tomorrow’s industry

DAVID HOWDEN began his insurance career at the age of 16. Starting out as a broker, Howden went on to establish Hyperion Insurance Group in 1994, which was originally a wholesale broker that employed three people. Today, Hyperion has more than 3,800 employees working in business units across the globe and achieved £542 million in revenue last financial year.

So, what sets Hyperion apart from its competitors? “We have employee ownership at the heart of our insurance and MGA business, and that’s really the key to it,” Howden says. “Because we’re owned by the people working in the business, we have a culture that’s different; we’re much more entrepreneurial [and] much more empowering … [and] the talent we have, to be blunt, is second to none.”

Howden also emphasizes the crucial importance of expertise.

“Clients want to buy expertise, so we are specialists; we are not generalists,” he says.

“Wherever we’re in an area, we want to really own that area [and] understand what it is … When you go around the group across the globe, we have people who are really experts in what they do.”

Howden points to the business’s ongoing success in fostering organic growth – in 2017, its organic revenue growth was 8%.

“You can grow by buying businesses – and

20

we grew 25% last year because we did buy some businesses,” he says, “but the reality is that organic growth is the barometer of the healthy business.”

Reflecting on Hyperion’s 24-year history, Howden singles out the 1998 launch of DUAL – now the world’s largest international under-

An evolving industry Looking to the future, Howden shares what he calls his ‘3D vision’ – factors he believes are now driving the world of insurance.

“Those three Ds are distribution, data and delineation,” he says. “I think distribution is absolutely key, and that can come about many

“Clients want to buy expertise, so we are specialists; we are not generalists. Wherever we’re in an area, we want to really own that area [and] understand what it is … When you go around the group across the globe, we have people who are really experts in what they do” writing agency – as a highlight.

“We launched DUAL in Spain,” he says. “I think it was something that was really key to the development of the group – having this ability to create an MGA where we were able to offer a really specialized service in products to brokers. I think this was a game-changing moment for the group.”

Another game-changer was the 2015 acquisition of RK Harrison [RKH]. “I tried to buy them for many years,” Howden says.

“RKH were the outstanding specialty broker.”

different ways. The use of data now – not just in insurance, but in all industries – is going to be a driver [of ] not only what clients want, but pricing, efficiency, everything.”

When it comes to delineation, Howden muses: “Are we going to be Uber-ized? Is it going to be the insurers? Is it going to be the brokers? I think that as an industry, we need to look at our efficiency levels. On average, something like 50% of the premium is being spent on delivery of the product … There are people who will look at that and think, ‘I can

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PROFILE Name: David Howden Company: Hyperion Insurance Group Title: CEO Based in: London Years in the industry: 37 Career highlights: The launch of DUAL and the acquisition of RK Harrison Greatest challenge: Maintaining Hyperion’s unique culture as the business grows

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16/03/2018 1:49:33 AM

PEOPLE

INDUSTRY ICON

actually take something out of that.’”

But is Howden genuinely fearful that the industry will be completely disrupted? “I don’t think that’s going to happen,” he says.

“There is a very real risk that some people have got very good data that some insurance businesses might not have, so I think that capturing of data and the use of it to give our clients a better service and to be more efficient is going to be what sorts winners from losers in the future … Data will drive our ability to offer better products, more efficient products

the past, Richard Elias, said to me, ‘David, look after the client, and the money will look after itself ’ … You must focus on the benefit for the client, not the benefit for you as the broker.”

Howden also stresses the importance of adding value through expertise, which he believes has allowed MGAs to make headway in the market.

“MGAs are able to do a few key things,” he says. “They’re able to attract real talent – talent that wants to come in and be a bit more entrepreneurial. They’re able to have a real

“I think anyone who’s nimble and flexible and embraces technology will be a survivor; it’s probably the slightly more lethargic, bigger businesses that are going to be more challenged in the future” [and] better pricing.”

Pricing and efficiency, he adds, will be even more important going forward.

“How do you price things? Who’s going to be better at pricing?” he says. “You’ve then got the whole efficiency element in terms of policy issuance, claims [and] how much you’re using robotics. I think brokers and underwriters who can embrace and invest in all those areas will succeed, and I think, as an industry, we shouldn’t be looking …. to fight and decide who’s going to eat each other’s lunch. We must pull together and make sure there isn’t a third party coming along and taking it all away whilst we’re squabbling over there.”

Capability and customer-centricity It will also be vital, Howden says, to maintain a focus on the client.

“Those brokers who put the client first will win,” he says. “A chairman I worked with in

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specialty as their focus; the whole management team is focused on delivering that, [and] sometimes they’re able to … deliver a better level of service to the brokers and therefore to brokers’ clients.

“I think anyone who’s nimble and flexible and embraces technology will be a survivor,” he adds. “It’s probably the slightly more lethargic, bigger businesses that are going to be more challenged in the future.”

Speaking of the future, now that Hyperion has surpassed the £500 million revenue mark, Howden is focused on the next leg of the journey.

In December, institutional investor Caisse de dépôt et placement du Québec [CDPQ] agreed to invest more than $400 million in Hyperion to provide new growth equity and liquidity to existing shareholders.

“Now,” Howden says, “we’re looking forward to: ‘When’s that billion [in revenue] coming up?’”

FAST FACTS: HYPERION INSURANCE GROUP

1994

Year Hyperion Insurance Group was founded (with three employees)

4

Brands under the Hyperion umbrella, which include DUAL Underwriting Agency Group, Howden Broking Group, RKH Specialty Broker and RKH Reinsurance Brokers

121

Number of Hyperion offices, spread across 38 countries

3,800

Number of employees working in Europe, the Middle East, Asia Pacific and the Americas

$6 billion

The amount of premium Hyperion wrote during the 2017 financial year

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email iba@keymedia.com

Navigating the talent crisis An aging industry on the cusp of a major staffing shortfall might find the answer was right there all along, writes Sharon Emek THIS COULD be the year when insurance faces a workforce crisis. According to the Bureau of Labor Statistics [BLS], there could be more than 200,000 open positions in the insurance industry that will go unfilled in 2018 due to the fact that 25% of the current workforce is expected to retire this year.

That problem is only expected to grow. According to the Griffith Insurance Education Foundation, today’s average insurance professional is 45 years old. Over the next 15 years, BLS estimates that nearly half of the current insurance industry workforce will retire.

The issue is compounded by the competition to attract millennials – a generation that has shown little interest in the insurance industry. According to a study by The Hartford, only 4% of millennials are interested in an insurance career.

As veteran insurance professionals leave, there’s a good chance that few candidates will be there to replace them. What that means for your brokerage: lost opportunity and possibly lower customer retention. The exodus of veteran insurance professionals, particularly from your business, could vastly impact your competitive advantage. A number of studies link customer satisfaction to employee retention and engagement – just another reminder to brokers that it’s not just any employee, but the right employee, who can boost business success.

The good news is that the veteran knowledge is sticking around. The Department of Labor predicts that by 2020, the number of

workers over age 55 will have nearly doubled since 2000, and this cohort will make up 25% of the US labor market.

But tapping into that talent will mean looking beyond the traditional business model. Depending on your location, the talent pool might not be as full as you need to find the right fit. The remote workforce, however, offers a wealth of experience regardless of

lighted some of the advantages of hiring older workers, including experience, maturity and professionalism, and a strong work ethic.

Mentoring potential: Your veteran remote worker can train and mentor your employees, share networking contacts, teach on-the-job skills, and help your employees improve productivity.

Faster onboarding: A skilled worker requires less training and has a deeper understanding of the business, operations and nuances that make a brokerage successful.

And older workers are often as tech-savvy as their younger colleagues, further smoothing their transition to a new brokerage.

Better work ethic: A report from the Sloan Center on Aging & Work at Boston College indicated that people working past retirement age are more engaged and satisfied with their jobs. The report also found that older workers ranked “job challenge and learning” as a top source of job satisfaction.

Lower cost: Remote workers require no overhead. They come with their own equipment and office space. Also, many older

“By engaging older workers in a remote setting, brokers can tap into a workforce teeming with talent and knowledge” geographic location. Many skilled older workers are choosing to transition into retirement or supplement their retirement income by working from home.

A few of the benefits older workers bring to the table include: Better productivity: Working remotely does not mean working more slowly. A study conducted by Stanford University and Chinese travel website Ctrip revealed that remote workers were 13% more productive than their in-house counterparts. They also worked 9.5% longer on average than officebased employees.

Larger talent pool: Just because there isn’t a local claim specialist who has expertise in your specialty doesn’t mean there isn’t one three states away.

Reliability: A 2014 study by the Society for Human Resource Management high-

workers aren’t looking for full-time salary and benefits packages – they want their second career on their own terms, and that often includes more work-life balance and flexible working conditions.

Solving the looming talent gap and keeping experience on the job is possible, but it will mean thinking outside the traditional business model. By engaging older workers in a remote setting, brokers can tap into a workforce teeming with talent and knowledge, and access skills that can help boost productivity and competitive advantage. They could become the secret weapon for your brokerage’s success.

Sharon Emek is the founder and CEO of Work At Home Vintage Experts [WAHVE], which matches retiring insurance professionals to insurance firms to address their staffing needs.

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16/03/2018 1:50:19 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

FIVE-STAR WHOLESALE BROKERS AND MGAs IBA unveils the MGAs and wholesale brokers that producers feel stand out above the rest THE WHOLESALE, specialty and surplus lines insurance industry exemplified both stability and growth during the last year.

According to a 2017 A.M. Best report, surplus lines reached a historic $42.4 billion in direct written premium in 2016, representing a 2.8% increase over the prior year and the fifth consecutive year of growth. Coupled with the statistics produced by the 15 states with stamping offices, which reported a 6.4% increase in premium during 2017, these are good indicators of the market’s health heading into 2018.

The Wholesale & Specialty Insurance Association [WSIA] strives to help members build profitable business relationships in the industry by providing unparalleled networking and business meetings, education, talent recruitment and development initiatives, regulatory and legislative advocacy, and promotion of the value of wholesale distribution, all designed to foster a healthy and growing market.

This industry is built on personal relationships and the ability to create innovative solutions for the most unique and complex risks.

WSIA’s Annual Marketplace and Underwriting & Leadership Summit provide a forum for

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networking where industry partners can collaborate and build technical expertise to develop cost-effective solutions for non-standard risks.

WSIA’s education programs, held throughout the year, also provide technical training and professional development to keep members at the forefront of best practices in the industry during this time of growth. As a result, WSIA members are innovators whose knowledge of and access to specialty markets result in customized solutions for retail agents and their clients.

WSIA also continues to monitor and advocate for state and federal regulation and legislation that impacts the industry. Revisions to the federal definition of private flood insurance in the Flood Insurance Market Parity and Modernization Act, preserving the private market’s ability to solve unique and complex flood risks for consumers, is currently a priority, as is uniform implementation of and continued support of the Nonadmitted and Reinsurance Reform Act [NRRA], reform of the Foreign Account Tax Compliance Act [FATCA] to eliminate the P&C industry’s requirement to report non-cash-value premiums under FATCA, and implementation of the National Association of Registered Agents and Brokers [NARAB].

Reminding retail insurance agents about the value of wholesale distribution is also a priority.

A 2016 analysis from Conning Inc. found that wholesale distribution generates lower cost ratios for insurers than retail distribution. In fact, the value that wholesalers offer to retail agents and brokers – technical expertise, innovative solutions to complex risks, access to strong and stable insurers – adds no cost to the transaction. While there has never been a cost for seeking a wholesale quote, we can now demonstrate that there is no additional cost in leveraging a wholesale specialist to find the best and most cost-effective solution, making it the best way to serve the insured.

WSIA members represent tens of thousands of individual brokers, insurance company professionals, underwriters and other insurance specialists and professionals worldwide. We look forward to supporting these outstanding professionals and the wholesale, specialty and surplus lines industry to navigate its bright future.

Corinne Jones President, 2017–2018 WSIA

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FIVE-STAR MGAs AND WHOLESALE BROKERS BY CATEGORY Broker/MGA

Underwriting Technology Range of responsiveness/ and products turnaround time automation

Marketing support

Compensation

Technical expertise and product knowledgeÂ

Overall relationship

Claims Support

All Risks Ltd. AmWINS Group Inc. Appalachian Underwriters ARC Excess & Surplus LLC Brown & Riding Burns & Wilcox Capitol Special Risks CRC Swett Genesee Hull & Company K&K Insurance Group Inc. Monarch E&S Insurance Services Preferred Property Program RIC Insurance General Agency Inc. Risk Placement Services Inc. RT Specialty LLC Scottish American Southern Insurance Underwriters Inc. Sullivan Brokers Wholesale Insurance Solutions U.S. Risk Insurance Group Inc. USG Insurance Services Inc. Worldwide Facilities LLC Denotes an all-star rating www.ibamag.com

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16/03/2018 8:04:24 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs FOR THE fifth year in a row, IBA asked producers to rate the performance and service of their wholesale MGAs and brokers on a scale of 1 (poor) to 10 (excellent) in eight different categories:

• Claims support

• Underwriting responsiveness/turnaround time

Producers were also asked to select the top three qualities they look for in an MGA or wholesale broker from a selection of criteria that included pricing, underwriting responsiveness, claims support, range of products, technology/automation, marketing support, technical expertise and product knowledge, compensation, and reputation. In addition, IBA asked producers to provide feedback on

• Technical expertise and product knowledge • Range of products • Compensation (commission, bonuses, profit-share, etc.)

• Marketing support • Technology/automation • Overall relationship

how their partners could improve the producer/wholesale relationship.

The MGAs and brokers that earned an average of 8 or higher in at least one category were awarded a five-star designation, indicating their superior service to the producer channel. In total, 22 wholesale partners made this year’s list of five-star brokers and MGAs. Four companies earned the distinction of All-Star MGA by earning five-star rankings across every category.

Read on to discover which MGAs and wholesale brokers are performing above the rest, and find out what producers had to say about the service they receive.

WHAT ARE THE THREE MOST IMPORTANT THINGS YOU LOOK FOR IN A WHOLESALE BROKER OR MGA?

HOW WELL DID WHOLESALE BROKERS AND MGAs PERFORM ON AVERAGE IN KEY CATEGORIES ?

IBA asked producers to select the top three most important qualities they look for in a MGA from a selection of 10 criteria.

Here’s what they had to say:

Overall relationship

Underwriting responsiveness/turnaround time 94%

Technical expertise and product knowledge 58%

Pricing 55%

Range of products 39%

Compensation (commission, bonuses, profit-share, etc.)

14%

Marketing support 12%

9.26

Technical expertise and product knowledge 9.25

Underwriting responsiveness/turnaround time 9.00

Range of products 8.68

Marketing support 8.58

Claims support 8.58

Compensation (commission, bonuses, profit-share, etc.)

8.54

Technology/automation 8.34

Claims support 11%

Reputation

Producers wrote in a few of the other qualities they look for in their wholesale partners:

8%

Other 6%

Technology/automation 3%

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WHAT OTHER AREAS ARE IMPORTANT TO PRODUCERS?

• Good rating system • Friendliness • Risk services

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OUT-THINK. OUT-WORK. OUT-EXECUTE. REPEAT.

If your client has a complex risk situation, you don’t have to go it alone. Our wholesale specialty risk professionals have deep experience and the drive to find superior placement for even the toughest risks.

We team with retailers to design creative solutions for all sized accounts. Our innovation, tenacity and responsiveness enable us to repeatedly out-execute the competition.

Find your RT Specialty broker at www.rtspecialty.com.

rtspecialty.com Agribusiness | Aviation | Casualty | Construction | Energy | Environmental | Healthcare | Life Science Professional & Executive Liability | Property | Real Estate | Transportation | Workers’ Compensation www.ibamag.com

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16/03/2018 8:04:47 AM

G A

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

C

P FIVE-STAR WHOLESALE PARTNER

RT SPECIALTY Headquarters: Chicago, IL Leadership: Timothy W. Turner (pictured), chairman and CEO; Edward F. McCormack, president; Michael T. VanAcker, chief operating officer

RT Specialty is the wholesale brokerage arm of Ryan Specialty Group, an inter­ national holding company specializing in wholesale brokerage, MGU underwriting companies and other specialty services.

Founded in 2010, RT Specialty is an independent wholesaler with no insurance company backing or venture capital

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funding, and is not affiliated with any other insurance broker, financial institution or company. Headquartered in Chicago, RT Specialty has 34 offices and 1,000-plus team members nationwide, in all of the major markets. With more than $5 billion in premium placements in 2017, RT Specialty is ranked as one of the leading wholesale insurance brokers in the US. RT Specialty specializes in brokering property, casualty, real estate/habitational, transportation, workers’ compensation, life sciences, and professional and executive liability risks, among many other classes,

with a concentration in tough, high-hazard risks that demand detailed expertise and specific industry experience. RT handles accounts of all sizes.

RT Specialty brokers place significant premium volume into the insurance marketplace across all lines of business, which translates into significant market clout. Couple this volume with the technical expertise, exceptional underwriting relationships and fine-tuned execution skills of the RT brokers, and the end result is consistent, exceptional, cutting-edge risk solutions for your clients.

G A

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16/03/2018 8:05:08 AM

GenerGeneralal ArArtistaisnan

OVERALL RELATIONSHIP FIVE-STAR MGAs AND WHOLESALE BROKERS All Risks Ltd.

AmWINS Group Appalachian Underwriters Brown & Riding

ConcConcrertete

Burns & Wilcox Capitol Special Risks CRC Swett Hull & Company K&K Insurance Group Monarch E&S Insurance Services

“I give my MGA an A+. But there is some room to improve with underwriting and turning quotes back promptly”

InInsusurereContContrarcatcotrosr.s.

When evaluating their MGAs and wholesale brokers as a total package, producers were generally pleased with the services they received across the board. Eighteen out of the 22 companies on this year’s list garnered a five-star rating for their overall relationship with producers – the most out of any category. On average, wholesale brokers and MGAs scored a whopping 9.26 out of 10 in this category.

“Excellent” and “superior” were just a few of the words producers tossed out when talking about their relationships with their MGAs and wholesale brokers, offering comments such as:

QuotQuotenowenowatappsatapps@abr@abramiamintenrtsetrastea.cteo.mcom

Preferred Property Program

• “From management to client services, everyone is nice and professional.”

RIC Insurance General Agency

• “Great to work with.”

PaiPaintnetresrs

RT Specialty

Scottish American

• “They are there when I need them … fast and knowledgeable. Nothing at all to improve.”

Southern Insurance Underwriters

• “I have an excellent relationship with this wholesale firm.”

Sullivan Brokers Wholesale Insurance Solutions USG Insurance Services

Worldwide Facilities

&&MorMore!e!

Wholesale partner performance

9.26

• “They are a true partner to me.”

Yet, despite all the praise, there were a few producers whose relationship with their wholesale broker or MGA had soured; one even went as far as to call their partner “the worst MGA.” A few producers offered advice as to how their relationship could improve: One said additional compensation would be welcomed, while another asked for more regular visits from their wholesale partner to continue to strengthen the relationship.

WeWehelhelp youp you helhelp yourp yourcuscustomertomer. .

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16/03/2018 8:05:25 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

FIVE-STAR WHOLESALE PARTNER

WORLDWIDE FACILITIES Headquarters: Los Angeles, CA Leadership: Davis Moore, CEO (pictured); Ron Austin, president and COO

Established in 1970, Worldwide Facilities is a national insurance wholesale broker and managing general agent. Its team of insurance specialists has access to

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virtually every specialty domestic and international insurance market. Worldwide Facilities has branch offices in several major metropolitan areas, including Los Angeles, San Francisco, San Diego, Irvine, South Bay (LA), Palm Springs, Phoenix, Salt Lake City, Orlando, Tampa, Atlanta, Savannah, Chicago, New York, Boston, Dallas, Houston, Hartford, Nashville and Seattle. The company is dedicated to bringing its best

resources to every opportunity across the entire United States.

Worldwide Facilities’ focus and commitment to its clients continues to be one of its top priorities. The company’s mission is to continue growing its business and increasing its relevance by combining its unmatched expertise, market relationships and service to deliver innovative solutions to its clients.

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16/03/2018 8:05:17 AM

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16/03/2018 8:05:21 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs TECHNICAL EXPERTISE AND PRODUCT KNOWLEDGE FIVE-STAR WHOLESALE BROKERS AND MGAs All Risks Ltd.

FIVE-STAR WHOLESALE BROKERS AND MGAs

AmWINS Group

All Risks Ltd.

ARC Excess & Surplus

AmWINS Group

Brown & Riding

Brown & Riding

Burns & Wilcox

Capitol Special Risks

Capitol Special Risks

CRC Swett

CRC Swett

Hull & Company

Hull & Company Monarch E&S Insurance Services Preferred Property Program RIC Insurance General Agency RT Specialty Scottish American U.S. Risk Insurance Group USG Insurance Services Worldwide Facilities Wholesale partner performance

9.25 Although this category seems more like an unstated expectation, IBA added it to the mix this year to find out how producers feel about their MGAs’ and wholesale brokers’ expertise. The good news is, wholesale partners are definitely meeting producers’ expectations, judging from the average score of 9.25 they received in this category.

For producers, expertise isn’t about having all the answers right away, but rather knowing where to find them or at least pointing a producer in the right direction. “Most issues are solved with first interface,” one producer said. “Some issues require [further] research, which is understandable and welcome.” Another producer appreciated the fact that their partner willingly refers them to an appropriate resource person if they can’t provide the requested product.

Still, a couple of producers noted that wholesalers and MGAs could use some improvement in other aspects, such as providing more nuanced information to explain the differences in coverage and endorsements from various carriers, and being willing to stretch their capabilities and learn more about other markets, even if they’re not necessarily part of their portfolio of expertise.

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UNDERWRITING RESPONSIVENESS AND TURNAROUND TIME

Monarch E&S Insurance Services Preferred Property Program RT Specialty Scottish American Southern Insurance Underwriters U.S. Risk Insurance Group USG Insurance Services Wholesale partner performance

9.00 As in previous years, underwriting responsiveness and turnaround time continues to be the most important thing producers consider when assessing a wholesale partner. Wholesale brokers and MGAs did their best to deliver, scoring a 9 out of 10 in this category – the third highest of all categories.

Overall, producers were satisfied with wholesalers’ responsiveness, whether they dealt with the underwriters themselves or their assistants.

In this business, it’s not just about being the fastest, but also about staying connected to producers and their clients every step of the way.

“They are my ‘go to’ for a reason,” one producer said of his MGA of choice.

“I’ve never had to wait, and any minor delays are explained.”

Even though most feedback from producers was positive, some had suggestions for improvement, including greater consistency. One producer noted that turnaround times are “excellent overall, but [there is] some fluctuation among offices.” Another commented that it can be “hard to gauge, as it depends on what department you’re working with.

Some underwriters are a 10, and others a 7.” This ties into recruitment as well: One producer advised his MGA to make sure they are “adding qualified people to achieve more of the same.” Other suggestions included more proactive work such as “providing more information on carriergenerated endorsements to avoid delay/extra work” and “supplemental apps [that] could be accessed on the website.”

www.ibamag.com

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16/03/2018 8:06:17 AM

FIVE-STAR WHOLESALE PARTNER

BROWN & RIDING Headquarters: Los Angeles, CA Leadership: Chris Brown, chairman (left); Jeff Rodriguez, president and CEO (right)

Brown & Riding is a national top 10 wholesale brokerage built around the core values of teamwork, quality and professionalism. Truly independent, the firm is 100% employee owned and managed with no outside ownership or debt. B&R is also the first wholesale insurance broker in the US to achieve ISO

9001:2008 certification, a nationally recognized certification requiring a comprehensive quality management system that is externally audited every year.

The QMS ensures that B&R follows its procedures and maintains efficiency and accuracy. Business is handled with the highest service standards and levels of consistency, making it easy for retailers to do business with B&R. B&R brokers and account executives are true experts. The company has developed 14 established specialty practice areas,

including amusement attractions and action sports; construction; energy, oil and gas; entertainment; environmental; financial institutions; healthcare; life sciences; nonprofits, product recall and contamination; real estate; technology; transportation; and workers’ comp.

B&R specialists thrive on teamwork, and retailers can always expect the best effort from the entire firm, not just one individual. With access to more than 350 markets, B&R strives to help retailers find the best options for their insured clients.

www.ibamag.com

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SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs RANGE OF PRODUCTS FIVE-STAR WHOLESALE BROKERS AND MGAs

FIVE-STAR WHOLESALE BROKERS AND MGAs

All Risks Ltd.

AmWINS Group

AmWINS Group

Brown & Riding

Appalachian Underwriters Brown & Riding Burns & Wilcox

Capitol Special Risks CRC Swett

Capitol Special Risks

Genesee

CRC Swett

Hull & Company

Hull & Company

Preferred Property Program

K&K Insurance Group

Risk Placement Services

Monarch E&S Insurance Services Preferred Property Program RIC Insurance General Agency RT Specialty Scottish American Sullivan Brokers Wholesale Insurance Solutions USG Insurance Services Worldwide Facilities Wholesale partner performance

8.68 Although producers understand the value of developing a niche, some appreciate wholesale partners who can offer a wide range of products, especially for markets that are harder to access. Wholesale brokers and MGAs performed well in this category, scoring an average of 8.68.

Some producers mentioned areas such as commercial auto, oil and gas, construction, workers’ comp and professional liability as products they’re keen for wholesalers to offer. For others, however, it’s a matter of enhancing capacity. “They can handle all our small to mid-sized accounts, [but] they do not work brokerage accounts well,” one producer said.

Another wanted better small-business capabilities from his MGA. Ultimately, it’s about demonstrating initiative and willingness to be flexible.

“Don’t only provide what we’ve asked for – give us alternatives and options,” one producer requested.

Still, many others encouraged their wholesale partners to stick to one or two areas of expertise – one producer commented that MGAs already have too many options, and they should consider limiting their products. “[Having a] niche is better than a broad range unless you can stay at the top of the game,” another producer advised. “Be number one or two in the sector [you’ve chosen].”

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MARKETING SUPPORT

RT Specialty Wholesale partner performance

8.58 Not a lot of producers expect extensive marketing support from their wholesale partners, preferring instead to handle marketing tasks themselves. Interestingly, though, the category did place a notch higher than claims support in terms of importance. While wholesale brokers and MGAs received a decent score of 8.58 out of 10 in this category,

“[They’re] among the best of our wholesalers – we actually see our reps/underwriters in the office” based on their feedback, producers seem to have varying preferences and mixed reviews for their wholesale partners when it comes to marketing.

For those who are pleased with the marketing efforts of their wholesale partners, a personal touch seemed to make all the difference. Even in the digital age, producers said they want “more visits” and “face time with wholesalers,” suggesting there are some aspects of the job that can never be replaced by technology. “[They’re] among the best of our wholesalers – we actually see our reps/underwriters in the office,” said one producer. Another producer commended his wholesale partner for not just providing detailed quotes, but also taking time to visit their office and discuss those quotes with them and their customers.

Informative emails were also generally appreciated by producers.

Although some producers don’t think marketing support from their wholesale partner is a pressing need, they agreed that most wholesalers should be keen to help out in this area should the need arise.

www.ibamag.com

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16/03/2018 8:06:25 AM

“RPS INSPIRES CONFIDENCE” – LEIGH SHIRLEY LEIGH SHIRLEY INSURANCE With Risk Placement Services (RPS) as my trusted partner, I feel confi-

dent I am providing my customers with the right solutions and products to meet their needs. RPS provides me access to the top markets and industry experts while offering customized solutions designed, negotiated, and tailored to each unique risk. I am confident in advocating RPS, to learn more call 866.595.8413 or email ContactRPS@rpsins.com.

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www.ibamag.com

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16/03/2018 8:06:29 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

FIVE-STAR WHOLESALE PARTNER

RISK PLACEMENT SERVICES Headquarters: Rolling Meadows, IL Leadership: Joel Cavaness, president

Risk Placement Services [RPS] is a managing general agent/underwriting manager and nationally focused wholesale insurance broker. RPS ranks in the top five

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in every insurance industry category and has consistently ranked as the largest MGA in the country for several years.

Established in May 1997 by current president Joel Cavaness, RPS is head­ quartered in Rolling Meadows, Illinois, and has more than 80 branch office and satellite locations.

RPS is composed of four divisions –

national brokerage, MGA/binding, programs and standard lines – and the company also focuses on the environmental, healthcare, transportation and executive lines segments of the insurance marketplace. For each of its programs and products, RPS works only with top-rated admitted and non-admitted carriers.

www.ibamag.com

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16/03/2018 8:06:35 AM

www.ibamag.com

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16/03/2018 8:06:38 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

FIVE-STAR WHOLESALE PARTNER

RIC INSURANCE GENERAL AGENCY Headquarters: Santa Rosa, CA Leadership: Gary Kitchen, president and CEO

RIC Insurance General Agency is an independently owned insurance general agency, distributing and underwriting commercial and personal lines insurance products and representing both admitted and non-admitted companies.

Last year was an exciting one for

38

RIC, which made heavy investments in onboarding people with expansive expertise and adding new products, markets and technology. The company grew by double digits in both its commercial and personal lines divisions, and also saw significant growth in its non-admitted commercial, non-admitted personal, specialty and transportation departments.

RIC aims to provide a nationwide audience of independent agents and brokers with a broad spectrum of insurance products and carriers. The company’s mission is to

give agents and brokers a competitive edge in the marketplace by providing a superior customer experience from writing the risk to claims support. RIC believes every transaction is a building block for a successful business relationship.

RIC is also one of only two insurance entities authorized as an official distribution channel for the State Compensation Insurance Fund of California. RIC provides thousands of independent insurance brokers access through the exclusive Access State Fund program.

www.ibamag.com

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16/03/2018 8:06:44 AM

CLAIMS SUPPORT

Wholesale partner performance

FIVE-STAR WHOLESALE BROKERS AND MGAs AmWINS Group Brown & Riding Capitol Special Risks CRC Swett Genesee Hull & Company Preferred Property Program RIC General Insurance Agency RT Specialty Southern Insurance Underwriters USG Insurance Services

8.58 Claims processing and turnaround is a critical part of the customer experience – when a claim takes weeks or months to be resolved, retail brokers are often the ones who take the blame. Eleven MGAs and wholesale brokers earned a five-star rating for their claims support, and the category tied with marketing support at 8.58 in terms of average performance.

Responsiveness is the most important factor when it comes to claims, although producers also praised their wholesalers for “speed and efficiency.”

Another producer gave his wholesale partner an unequivocal thumbs up: “I’ve had firsthand experience with a claim, and the team was incredibly helpful and knowledgeable.”

Suggestions for improvement included the addition of a claims liaison.

“With claims issues, we have to go through the individual broker, not a claims department,” one producer said. It’s also important to note that the vast majority of producers who responded to this survey couldn’t assess this category because they have no claims experience with their wholesale partner. Some producers commented that claims services were unavailable, highlighting a missed opportunity for many wholesalers.

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39

16/03/2018 8:06:48 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

Built on the pioneering spirit of its founder in 1952, K&K Insurance has grown from its original focus on motorsports to become one of the largest and most respected providers of insurance services to the sports, leisure and entertainment industries.

Every year, K&K offers coverage for exciting events and organizations from festivals and events to sports teams and tourist attractions.

Amateur Sports Arenas & Stadiums Bowling Facilities Camps & Campgrounds Civic Centers Collegiate Sports Community Centers

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Join over 9,000 agents across the U.S. and Canada who choose the sports and recreation expert for their clients—K&K Insurance.

In addition to the traditional application process for complex specialty risks, K&K provides agents with instant access to coverage online. Our collection of e-commerce websites allow agents to easily purchase coverage immediately for many programs

Entertainment Event Cancellation Fairs & Festivals Family Fun Centers Franchised Powersports RV Dealers Fitness Instructors

Fraternal Orders Gaming Health & Fitness Clubs Horse & Dog Tracks Hunting, Fishing Guides Motorsports Teams & Facilities

that traditionally require less underwriting. Agents using our online application process earn commission without the hassle of completing paper applications and waiting for a response.

Visit our website for underwriting guidelines and applications.

kandkinsurance.com

K-12 Insurance Movie Theaters Pari-mutuel Racing Performing Arts Centers Professional Sports Products Liability Resorts

Skating Facilities Special Events Sports Facilities Tourist Attractions Whitewater Rafting Guides Trade Shows Zoos & Aquariums

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16/03/2018 8:06:53 AM

E-Commerce Websites Apply, quote, bind, and receive proof of coverage immediately!

SportsInsurance-kk.com 800.426.2889 info@sportsinsurance-kk.com

• Amateur Sports Teams, Leagues & Associations • Amateur Sports Tournaments & Events • Sport Instructors

CampInsurance-kk.com 800.426.2889 info@campinsurance-kk.com

• Youth (19 & under) Sport Camp and Clinics • Youth (19 & under) Non-Sport Day Camps

EventInsurance-kk.com 800.328.2317 info@eventinsurance-kk.com

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• Groups conducting youth or adult non-sport activities including art, bird watching, book clubs, collectors, computers, cooking, crafts, game or card clubs, gardening, genealogy, etc.

DanceInsurance-kk.com 800.648.6406 info@danceinsurance-kk.com • Dance Studios • Dance Schools • Dance Instructors

FitnessInsurance-kk.com 800.506.4856 info@fitnessinsurance-kk.com • Small Fitness Facilities • Fitness Instructors

MartialartsInsurance-kk.com 800.648.6406 info@martialartsinsurance-kk.com • Martial Arts Schools • Martial Art Instructors • Self-Defense Instructors

• Short Term Special Events • Concessionaires, Vendors, and Exhibitors • Entertainers & Performers

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24-47_Five Star Wholesale-SUBBED.indd 41

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16/03/2018 8:06:58 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs COMPENSATION

Wholesale partner performance

FIVE-STAR WHOLESALE BROKERS AND MGAs All Risks Ltd. Brown & Riding Burns & Wilcox Capitol Special Risks CRC Swett Genesee Hull & Company Monarch E&S Insurance Services Preferred Property Program RT Specialty Scottish American Southern Insurance Underwriters USG Insurance Services Worldwide Facilities

8.54 “Who doesn’t want more?” is the prevailing attitude when it comes to compensation, and that rings true with the respondents to this year’s survey. While producers agreed that more compensation is always welcome, the majority voiced satisfaction with their wholesale partners’ compensation model. In total, 14 MGAs and wholesale brokers earned a five-star rating in this category, although it came in seventh in terms of overall performance.

For such a polarizing topic, producers had few criticisms overall about the compensation received from their MGAs and wholesale brokers. “They are a little higher than most,” said one producer, while another called his MGA’s compensation “fair and competitive.”

Another producer praised his MGA’s “excellent bonus program.”

The term “fair” came up often in producers’ responses, indicating that most wholesale partners offer compensation that’s in line with industry standards.

However, not all producers were pleased with amount they received from their wholesalers. “Pay the full commission,” said one frustrated producer. “Do not describe the commission and then let the broker find out the MGA is getting paid a split of that commission.”

FIVE-STAR WHOLESALE PARTNER

PREFERRED PROPERTY PROGRAM Headquarters: Holmdel, NJ Leadership: Ken Hager, president; Carmen Suarez, EVP, program business; Vincent Hager, president, JGS Insurance

As an MGA, Preferred Property Program, in conjunction with AURA (located in Hallandale Beach, Florida, and run by Tom Clementi), is a wholly owned MGA subsidiary offering umbrella policies from $1 million to $100 million in limits, as well as workers’ comp, environmental impairment, equipment breakdown and package policies for real estate owners.

Some of the companies Preferred Property currently represents as an MGA for various product lines are XL Caitlin Insurance, Chubb Insurance, AmTrust Financial, CAU and CNA Insurance.

“We are extremely pleased to be recognized as a Five-Star MGA, especially

42

‘

as this award is based on the nominations of our retail brokers,” says Ken Hager, president of Preferred Property. “I can’t thank them enough for this honor.”

“We try to make their job as easy as we possibly can,” adds executive vice president Carmen Suarez, “and it’s very rewarding to hear that our brokers hold us in the same

high esteem as we hold them.”

With a dedicated team of talented individuals who know what their brokers need and how to get it done for them, Preferred Property is headquartered in Holmdel, New Jersey, and was founded in 1998 by parent corporation JGS Insurance.

www.ibamag.com

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16/03/2018 8:07:08 AM

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16/03/2018 8:07:11 AM

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs

FIVE-STAR WHOLESALE PARTNER

BURNS & WILCOX Headquarters: Detroit/Farmington Hills, MI Leadership: Alan Jay Kaufman, chairman, president and CEO

Burns & Wilcox, the flagship organization of H.W. Kaufman Group, is North America’s leading wholesale insurance broker and underwriting manager, capturing more than $1 billion in premium annually by placing the world’s most sophisticated and complex risks.

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Internationally recognized for its expertise in commercial and professional liability, property, marine, and personal insurance, Burns & Wilcox offers wide-ranging and comprehensive solutions to serve retail insurance brokers and agents.

Founded in 1969 and privately owned, Burns & Wilcox has no retail operation and never competes against its brokers and agents. Its standard of service, depth of market relationships and outstanding talent are unsurpassed in the specialty

insurance sector. More than 2,000 insurance professionals in a global network of 60+ offices deliver deep underwriting and brokerage solutions that result in over 500,00 bound policies per year.

Burns & Wilcox recently signed official sports sponsorships with the Detroit Red Wings and the team’s alternate captain, Justin Abdelkader, as well as PGA golfers Jimmy Walker (2016 PGA champion) and Webb Simpson (2012 US Open winner).

www.ibamag.com

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16/03/2018 8:07:18 AM

44670

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In golf, as in specialty insurance, every decision involves risk.

Dedication and expertise are essential in maneuvering difficult terrains with confidence. Burns & Wilcox’s world-class team has the power and drive to handle your client’s most complex risks with ease.

Burns & Wilcox, the leader in specialty insurance.

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16/03/2018 8:07:21 AMPM 5/30/17 4:57

SPECIAL REPORT

FIVE-STAR WHOLESALE BROKERS AND MGAs TECHNOLOGY/AUTOMATION FIVE-STAR WHOLESALE BROKERS AND MGAs Brown & Riding Capitol Special Risks Hull & Company

HOW CAN WHOLESALE PARTNERS IMPROVE? IBA asked producers to give their feedback on how their wholesale partners can improve their service. Here’s what they had to say:

“Quicker turnaround time, better coverages, more flexibility with risks”

Preferred Property Program Scottish American USG Insurance Services Wholesale partner performance

8.34 Even with all the digital advances in the industry and the constant talk about keeping up with technology, this category continues to rank at the bottom of producers’ priority list. However, the incongruity of producers’ attitudes toward technology becomes clearer when sifting through comments such as: • “As long as we get our quotes on time, we are not picky about technology/automation.”

• “They have online capabilities for sure, [but] to be honest, their email is much more efficient, as they are on it.”

• “Speed and predictability are key. More access is always good, and responsiveness wins the day.”

These comments suggest that some wholesale partners might not yet be as quick on the uptake with technology as producers expect, which is why many producers prefer their wholesale partners to stick to tried and tested methods to make sure they deliver on time.

“As long as we get our quotes on time, we are not picky about technology/automation” Still, others would like to see wholesale partners cover more ground by enhancing the tech functions they have available. One producer complained about his wholesaler’s app: “The system is too touchy … if you touch the wrong key, you have to start over.” Another producer wanted his wholesaler to provide access to products online, while another preferred to have products accessible outside of a website. A number of others suggested going paperless and asked that wholesalers provide more tools and options for online quoting, issuing and submission.

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“Deliver specific policy nuances in a onepage format for an easy-to-understand method when talking with clients” “Be more available via telephone, and streamline forms so that client information and information that repeats only has to be entered once” “Offer some training for products and technology” “Offer easier access to products and supplements through the website, and provide the ability to submit risks through the website” “Expand markets so there is more opportunity for better pricing” “We could use updated product/carrier availability listings more regularly, as well as underwriting appetites for those products/carriers” “When providing a quote, send all competing carrier proposals as backup to the MGA recommendation” “Even if we come to them with a small account, we need them to be just as aggressive as they are on a large account” “Bring expertise that I don’t have. Review the quotes before sending to me. Push back on the underwriter if necessary. If you are going to take part of the commission, don’t flip quotes – earn it”

www.ibamag.com

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16/03/2018 8:07:25 AM

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14/03/2018 11:08:46 16/03/2018 8:07:32 AMPM

FEATURES

SECTOR FOCUS: TERRORISM

Tackling the terrorism threat

Terrorists are changing their tactics, and the insurance industry is being forced to respond with innovative products TERRORIST-RELATED events are occurring around the globe with increasing regularity, and insurance products that provide protection against such tragedies are playing a crucial role in the modern world. The tactics employed by terrorists have evolved in recent years, and businesses need to ensure that they’re protected should they be caught up in such a potentially catastrophic event.

Even if a business isn’t the specified target

of an attack, it may still suffer as a result of indirect interruption to its operations. The tragic events witnessed over the past few years in North America and Europe have demonstrated that almost any business has the potential to be impacted.

The insurance industry is under pressure to release products that respond to the changing – and, in some regions, increasing – threat.

“The insurance industry also has to tailor

THE GLOBAL IMPACT OF TERRORISM Number of people injured due to acts of terrorism worldwide

50,000 40,000 30,000 20,000 10,000 0

44,103

33,901

32,660

30,684

25,903

21,652

32,880

34,785

37,419

33,814

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 Source: Statista

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those products for the myriad industries that might fear themselves more susceptible to these types of incidents – for example, concert halls, nightclubs, restaurants, churches, schools, grocery stores, hotels, casinos, to name a few,” says Scott Carroll, executive vice president and program director at Take1 Insurance. “The issues associated with insuring terrorist-related issues with a church are different from those associated with insuring a restaurant, and the industry has to be nimble to recognize those differences.”

As terrorists’ tactics evolve away from large-scale explosive devices and toward ‘lone wolf ’ attacks with easily accessible weapons such as vehicles, the insurance industry has been forced to adapt by creating policies that offer relevant coverage. Although many instances of this new breed of terrorist attack have led to relatively little property damage, businesses in the immediate vicinity are often forced to halt operations for sustained periods.

The US faced a number of terror-related and active assailant incidents last year, including a shooting at the Fort Lauderdale airport in January, a truck attack in New York City in October, a shooting at a Texas church in November and the shooting at a Las Vegas music festival, which made history as the deadliest mass shooting in US history. These events have forced people to open their eyes to the very real exposures of malicious acts.

“Active assailants remain the single largest threat for US locations – more so than terrorism,” Carroll says. “That has been validated by events that occurred in 2017, which were more malicious or active assailant events than terrorist incidents. Another lesson we’ve learned is that any public setting is now a potential exposure. Places where large numbers of people congregate – like sidewalks, grocery stalls, malls, restaurants – all have their risks, and it has become evident that we need to become more vigilant about those places.”

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ORDINARY PEOPLE GETTING THE EXTRAORDINARY DONE

What’s new in terrorism coverage?

Terrorism insurance policies have historically provided coverage for liability and property damage, along with business interruption (even when there is no actual physical damage or property loss) and contingency-type cover such as event cancellation. “When there is a threat of destructive action by a terrorist or active assailant upon a concert or a game that causes that concert or game to be canceled and the arena or stadium to be evacuated,” Carroll explains, “there can be ticket redemption costs associated with that event that no one would expect or contemplate after the event started.”

In response to the new wave of terrorist

not contemplate liability exposures in the same way modern policies do. Today, insurance companies are launching new products that provide protection against assailant attacks and loss of attraction suffered after an act of terrorism or active assailant incident.

Active assailant products indemnify for firstparty property damage, business interruption, and medical expenses and counseling costs for third parties in the aftermath of an active assailant event.

“There are a huge number of companies attempting to respond to the concerns of their insureds by offering some form of coverage,” Carroll says. “The insurance carriers are realizing that the Terrorism Risk Insurance Act

“Any public setting is now a potential exposure. Places where large numbers of people congregate – like sidewalks, grocery stalls, malls, restaurants – all have their risks, and it has become evident that we need to become more vigilant about those places” Scott Carroll, Take1 Insurance attacks, the insurance industry is launching innovative policies that cover insureds against the various types of losses arising from terrorism or sabotage. In addition to providing coverage for property damage and business interruption, modern policies gives the insured the option to add various extensions to protect against indirect business interruption losses such as denial of access, contingent business interruption, and disruption to public services and utilities.

When terrorism policies were first introduced to the market, Carroll says, most did

[TRIA] is really not intended to respond to the benefit of the insured. This coverage will likely always stay with expert specialty markets because they know how to manage the exposures, how to manage the claims.”

In studying the practices of both terrorists and active assailants, specialty markets are well positioned to understand how policies need to be designed to respond to the changing needs of insureds. The grim reality of the modern age is that many organizations need innovative terrorism coverage to protect their businesses.

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16/03/2018 3:29:27 AM

FEATURES

SECTOR FOCUS: TERRORISM

WHAT DOES TERRORISM COST? Annual economic losses due to terrorism worldwide

50

2012

2013

2014

$84 billion

$71 billion

$27 billion

$32 billion

$31 billion

$24 billion

$19 billion

2011

$19 billion

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$10 billion

$27 billion

$0

$13 billion

$30bn

$41 billion

$60bn $8 billion

For agents and brokers operating in the space, Carroll has a strong recommendation: Do not rely on TRIA. “Understand what TRIA – or TRIPRA – really is and really intends to cover,” he says. “Realize that there are a number of markets out there willing to address the issue of terrorism and/or active assailant or threat cover, and therefore you need to be armed in order to offer. The marketplace has responded, and your insureds will want to know.”

In what is a rapidly changing market, Carroll also urges agents to educate themselves as comprehensively as possible. Get to know the products and the scenarios in which they will be tested. Is an active shooter policy really the most suitable policy when, for not that much more premium, an agent

$76 billion

Arm yourself with knowledge

$46 billion

$90bn

$91 billion

$104 billion

$120bn

2015

2016

Source: Institute for Economics and Peace

can offer a more robust product that contemplates exposures beyond those perpetrated by a person with a gun? Those are the kinds of questions agents should consider and should be able to answer confidently.

One thing is for sure: This is a space destined for growth in upcoming years.

“These policies will become more and more common; we see a substantial uptick in the

number of accounts we quote and bind every year and anticipate this trend will continue,” Carroll says. “We liken the sale of the combined crisis cover to how EPLI or cyber liability was sold in the past – very slow sales in the beginning when the products first came out, but today the uptake of those products is much more robust as more and more people realize the value of buying those covers.”

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9/02/2018 3:45:46 16/03/2018 3:29:37 AM

FEATURES

AGENCY INSIGHT

Succeeding as an employer of choice A multifamily and real estate expert, Acentria Insurance CEO Kendall McEachern shares how the market is changing in 2018 and how his agency evolved into an award-winning employer IBA: How did you get into the multifamily and real estate space?

Kendall McEachern: In the early 1990s when I became a risk management consultant, I had a family member who was in a seniorlevel position at a multifamily company, who asked me to come into their organization and help them get their arms around some risk management issues and insurance costs.

I started doing that on a consulting basis until the owner of a large company encouraged me to start a business doing risk management strictly for multifamily businesses. I did that and grew that business to a substantial size. At one time, I was handling the risk management and insurance for about 450,000 apartments across the US.

IBA: What are the biggest challenges in the multifamily and real estate market today?

KM: The biggest challenge right now is the changing of the marketplace. We have been in a soft market for quite some time. With the number and magnitude of the natural disasters in 2017 – from the fires in California and the hurricanes to the earthquakes and floods – the catastrophic losses in 2017 have had a direct effect on the marketplace today.

We are really starting to see the markets

52

harden and premium increase in property & casualty lines of coverage. Whether or not you have claims, you can see increases upwards of 25% to 50%. On the multifamily side, on average, we are seeing premium increases somewhere between 10% and 25%. With that recent hurricane activity, reinsurance costs to carriers may continue to rise, resulting in increased premiums being passed on to consumers.

In addition to the hardening from the natural disasters, some of the insurance carriers that typically write those coverages are pulling out of the marketplace, which leaves holes and gaps for other carriers to fill.

In November, I was in London negotiating renewals for two of my largest clients, and while I was there, the industry was on the

leading edge of all the changes that we are seeing now.

IBA: What strategies have you used to grow Acentria and your multifamily/ real estate business?

KM: For the first seven years that Acentria was in business, the partners did not take any profits out of the company except to pay taxes.

We needed those profits to perpetuate the company and spend the money on hiring the right people in the right seats, and we really focused on growing our commercial, personal and employee benefits lines of coverage.

To grow our multifamily and real estate businesses, we stay active and engaged with several chapters of the Community Associations Institute, an organization that

HELPING HURRICANE VICTIMS Headquartered in Destin, Florida, with more than 35 additional locations in Florida, Georgia and South Carolina, Acentria Insurance is no stranger to hurricanes. Last fall, when Hurricane Irma caused widespread damage throughout the Caribbean and Florida, Acentria stepped up to support its clients and communities. Within four days of Irma’s landfall, a team from Acentria drove 20 hours to Key West, armed with a rental truck full of supplies.

In total, Acentria donated more than 500 bags of food and hygiene products and 111 cases of water to clients, team members and residents of Key West.

“Being from Florida, hurricanes are near and dear to our hearts, and we understand how devastating they can be,” Kendall McEachern says. “We learned to have compassion for our communities and for our clients.”

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THE PATH TO ACENTRIA INSURANCE

1991 Kendall McEachern starts a risk management consulting firm for the multifamily industry

1995 McEachern adds insurance services to his risk consulting business

2001 After selling his risk consulting business to an agency and staying on to run its Georgia operation, McEachern joins Insurance Office of America [IOA] in Atlanta

“Having compassion and empathy, asking for advice and not just receiving it, but also acting on that advice – that’s what helps grow a better organization” serves community associations and homeowners. I have had the pleasure and honor to speak on topics concerning these areas to boards of directors, property managers, and more on the local, state, and regional levels. In addition, we leverage sponsorship opportunities at trade shows, serve on discussion panels and more.

Lastly, our in-house marketing department works with clients to develop and co-brand materials for their clients – for example, safety newsletters for property residents or presentations and collateral to promote the master program to attract additional properties to join a client’s portfolio. Multifamily clients with multiple properties enjoy the benefits of

a master program that is created specifically for their portfolio.

IBA: Acentria was named Insurance Industry Employer of Choice at the 2017 Insurance Business America Awards. In your opinion, what makes an employer of choice in this industry?

KM: In my opinion, it starts at the top and trickles down to how you treat your employees.

I personally like to refer to our company team as our work family. Having compassion and empathy, asking for advice and not just receiving it, but also acting on that advice – that’s what helps grow a better organization.

I make it a habit to speak with every person

2004 McEachern moves to Destin, Florida, to open a new office for IOA

2010 Along with two partners, McEachern founds Acentria Insurance

2017 Acentria wins the award for Insurance Industry Employer of Choice at the inaugural Insurance Business America Awards in Chicago in the office every day, and on Mondays, I like to ask every person how their weekend was or something about their family. That really goes a long way in showing employees that we care about them and we care about their families.

It truly starts at the top, and it is a requirement for those top people to treat employees with dignity and respect and listen to what they have to say.

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16/03/2018 3:30:45 AM

FEATURES

SECTOR FOCUS: CONSTRUCTION

An industry on the rise All signs point to a booming construction industry in 2018 – so how can agents capitalize on this space?

THE CONSTRUCTION industry in the US is set for another bumper year. Buoyed by broad economic expansion, construction firms are confident that demand for all types of construction services will continue to grow throughout 2018. A recent survey from the Associated General Contractors of America found that 75% of construction companies plan to expand their payrolls in 2018. Given the newly enacted federal tax cuts and the Trump administration’s desire to reduce regulations, it’s pretty clear why the outlook for the

federal government.”

Andy Murray, chief underwriting officer for construction at Starr Companies, has seen a noticeable uptick in planned construction projects, including numerous new undertakings in several large cities across the US. The vast majority of major projects continue to be focused in the habitational space, particularly mixed-use complexes, which can include hotels and long-term rental and condominium units.

“The trend of younger workers gravitating

“The construction industry is booming, both in terms of housing and hotels.

However, rising interest rates ... and some cities getting overbuilt may put a damper on this growth” Charlie Wardlaw, Worldwide Facilities construction industry is so bullish.

“The construction industry is booming, both in terms of housing and hotels,” says Charlie Wardlaw, executive vice president at Worldwide Facilities. “However, rising interest rates in the not-too-distant future and some cities getting overbuilt may put a damper on this growth. The next boost to the industry will be infrastructure spending funded by the

54

to urban centers has continued to drive demand for all types of housing across the country,” Murray says. “Not to be overlooked, however, is the increased activity in major infrastructure work. Transit authorities in several major cities have embarked on, or are ready to roll out, major capital improvement programs funded with billions of dollars, with work projected to occur over several years.”

Understanding the construction space Construction insurance policies provide protection for a broad range of businesses and individuals – from general contractors building commercial buildings and residential properties to small independent builders performing specialist services. Claim types and volumes differ depending on the geography and segment the construction company operates in. “The West initiated the start of construction defect claims, which accelerated in the late 1980s and early 2000s,” Wardlaw says. “That trend has now spread into Texas and Florida as plaintiff attorneys have found new pastures. In New York, the labor laws continue at a pace that makes it one of the few really difficult markets in the US.” High-volume slips, trips and falls, which typically happen when workers come into contact with debris in work areas, tend to be particularly common in the New York jurisdiction. The region also sees a high frequency of claims related to falls from scaffolds and ladders, triggering litigation pursuits of the absolute liability statute under NYS Labor Law 240(1).

In Texas, especially along the southern border, street and roadway accidents involving third-party non-construction workers are a common occurrence, Murray explains.

In most cases, the insurer is contracted to provide defense and indemnification to the general contractor, subject to Texas antiindemnification statutes.

“Another common claim occurring with increased loss frequency in various jurisdictions in the South involves the use of covered autos by insured drivers – i.e. company employees operating company-owned autos – getting into motor vehicle accidents,” Murray says. “In many instances, carriers are obligated to provide coverage and defend the insured driver and corporate entity if the investigation and evaluation warrants.”

Murray describes the South and West as being “plaintiff-friendly” in the construction defect arena. “This book of business has more capacity in residential construction, involving

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OPTIMISM IN THE CONSTRUCTION INDUSTRY In its 2018 construction industry outlook, the Associated General Contractors of America asked contractors nationwide which segments of the market they expected to expand this year. Overall, 44% of contractors expressed a positive outlook for all types of construction.

Contractors nationwide are most optimistic about:

25% 20% 15% 10% 5% 0%

22%

21%

21%

20%

18%

17%

17%

The private office market segment

Transportation and retail

Warehouse and lodging segments

Water and sewer construction

K-12 construction

Highway construction

Hospitality construction

Source: Expecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook, Associated General Contractors of America

multiple condo- and/or unit-dwelling owners and homeowner’s associations,” he says. “We see a pattern of these types of losses in Texas, California, Nevada and Arizona, to name a few.”

A construction company without adequate coverage or with gaps in its coverage faces a multitude of serious risks. The financial implications associated with an uncovered claim could be catastrophic for a construction firm in any segment.

“The steps a firm may need to take in order to satisfy its contractual and legal obligations can cause it to miss deadlines or other similar obligations related to other clients’ projects, thereby creating spiraling negative reputational damage,” Murray says. “A firm

Clermont Specialty Managers rebrands as Berkley Luxury Group for national rollout

R

UTHERFORD, N.J.—Clermont Specialty Managers, a Berkley

New Jersey, Illinois, Pennsylvania, Maryland, Virginia and the District of

Company, is expanding its service offerings nationwide and rebranding

Columbia and most recently, Minnesota and Massachusetts. Berkley Luxury

as Berkley Luxury Group with two divisions, Berkley Luxury Real Estate

Group also writes fine dining business in these states, as it does in California,

Specialists and Berkley Fine Dining Specialists. The change will take effect

Connecticut, Missouri, and Nevada, and plans to file in remaining jurisdic-

February 1st.

tions as it expands its restaurant division nationwide.

President Bill Johnston said the rebrand is the most visible component

“We chose the name ‘Berkley Luxury Group’ because it quickly tells

of the company’s state-by-state U.S. rollout. The new name is designed to

our best-of-both-worlds story: that we have the underwriting and claims

clearly identify the company as an operating unit of Berkley, one of America’s

expertise and responsiveness to deliver exceptional service to these two very

largest commercial line writers, and what Berkley Luxury Group offers:

specialized luxury markets, plus we also have access to the strength and

tailored, all-inclusive insurance solutions for luxury condo, coop and rental

stability of a large, well known and highly regarded corporation,” Johnston

properties and fine dining restaurants.

said. “The new name also reminds our employees, producer partners and

“We’re well known in these markets within our initial footprint of New York, New Jersey, and Illinois,” Johnston said, “but as we’ve expanded, we knew we needed a name that could carry our banner into new territories, to immediately convey the unique benefits of working with us.”

The company, headquartered in Rutherford, New Jersey, with offices in New York City and Chicago, writes luxury habitational business in New York,

insureds of our commitment to satisfying the needs and wants of those who work in luxury real estate and fine dining.”

As a part of the rebrand, the company will also be reworking its website and social media presence.

To learn more about Berkley Luxury Group and its insurance and risk management products, visit www. berkleyluxurygroup.com.

Products and services are provided by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. Certain coverages may be provided through surplus lines insurance company subsidiaries of W. R. Berkley Corporation through licensed surplus lines brokers. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.

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16/03/2018 3:33:23 AM

FEATURES

SECTOR FOCUS: CONSTRUCTION

“You can create online platforms to do things more quickly and cheaper than the other guy. Or you can be more of a consultant for your clients and provide them with true insight and service for their more complex needs and claim issues” Casey Evans, Risk Placement Services with inadequate coverage or gaps in coverage faces an existential threat.”

An evolving market Insurance companies are eager to take advantage of the construction boom, and for sectors outside of New York, the insurance market for contracting risks remains competitive for annual practice, wrap-up and project-specific programs.

“These carriers have been providing very low-deductible and premium program structures requiring no collateral for years,” Murray says. “New York general liability coverage availability, pricing and structure has

56

been and continues to be driven by the impact of New York labor law, which continues to keep retentions and premiums at higher levels than other parts of the country.”

In addition, the number of carriers willing to provide general liability coverage in New York has remained lower than in other parts of the country, which also impacts competition and opportunity for growth. The availability of reinsurance support for layers in excess of the primary 1/2/2 has begun to significantly decrease for New York risks, which will, in turn, impact pricing for insureds.

Away from the mammoth New York market, pricing for commercial contracting

risks has remained competitive, despite a record number of catastrophic losses in 2017.

However, the much-anticipated pressure on primary casualty insurance rates has not really materialized. “Invariably, on many accounts, the majority of competing carriers are within a fairly tight range of each other in terms of pricing,” Murray says, “although an outlier may unpredictably offer something that is 30% less than the market in premium.”

As the construction market continues to grow, Murray expects the use of predictive analytics to play an increasingly central role in underwriting. He believes integrating Big Data risk and exposure patterns with premium, rate and loss levels will form the base for increasingly sophisticated automated pricing metrics.

“My belief is that this will be seen primarily in the middle- and smallermarket-size contracting risks where the individual account characteristics mean it’s difficult for the accounts to be efficiently underwritten manually,” he says. “Just as with the underwriting side of the business, brokers’ and agents’ true value is provided through a deep understanding of their customer. The better the understanding of the specific and unique driving factors within each contractor’s operations, the better brokers and agents are able to match services and drive the most positive operational results.”

Although there is clearly ample opportunity for ambitious agents to grow their books of business in construction, they’ll need to differentiate themselves from the competition.

Casey E. Evans, area senior vice president at Risk Placement Services, offers some suggestions as to how agents can stand out in what is an increasingly transparent and expeditious world.

“You can create online platforms to do things more quickly and cheaper than the other guy,” he says. “Or you can be more of a consultant for your clients and provide them with true insight and service for their more complex needs and claim issues. Go out of your way to help clients out the most when they inevitably do have claims.”

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16/03/2018 3:33:33 AM

IBA s

Insurance Business America is the country’s leading business magazine for today’s sophisticated commercial insurance broker/ agent

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Profiles and case studies of successful brokers and agents Interviews with industry leaders Special reports and surveys In-depth features on specialist lending Business strategy content

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14/03/2018 PM 16/03/2018 10:48:42 3:33:35 AM

FEATURES

BUSINESS STRATEGY

What to change about your business in 2018 If you run your own agency, there are three things you should consider doing differently this year, suggests management consultant Stephen Barnes

THERE IS a Latin phrase, omne trium perfectum, which means that everything that comes in threes is perfect, or every set of three is complete. It is a principle known as the Rule of Three, which suggests that events or characters introduced in threes are more humorous, satisfying or effective in executing a story and engaging the audience.

The audience is also more likely to remember the information conveyed. This is because having three entities combines both brevity and rhythm by creating a pattern from the smallest amount of information possible. It makes the author or speaker appear knowledgeable, easy to understand and catchy.

That rule can be applied to business, too.

To help you get into gear for the year ahead, here are my Business Rules of Three – three things to change about your business in 2018.

1

Move from practitioner to business owner

Plumbers, electricians and builders go to trade school and undertake both practical and theoretical lessons as part of their training. Software developers, chefs, lawyers, hairdressers and doctors – they all learn the skills to do their jobs both capably and competently.

Then they finish their education or

58

apprenticeship and get their first job, and discover that they know less than they thought. So they continue learning. After a few years, they’re an expert. However, throughout this period, they are only learning to become an effective practitioner and not a successful business owner.

Running a business is a separate job and

a skill too, and therefore it requires time and investment to learn and develop business skills to become capable and competent to do that job well. Unfortunately, business skills are not part of a plumbing, hairdressing or electrical apprenticeship, or part of the curriculum for lawyers, doctors or accountants. (Contrary to popular belief, accounting

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courses do not equip you with the skills to run a business.)

If you look at most business startups, they either evolve from what was once the business owner’s hobby, or they are a result of someone wanting to work for themselves.

Think of web designers or bookkeepers.

These people are experts in their fields and have skills, but what often happens when they go out on their own, ill-prepared, is that they work hard and build up a customer and client base, then they get even busier, and later you hear that they’ve either gone out of business and/or their family life or relationships have broken down.

Were these people incompetent or unskilled at what they did? No. Their mistake was that they did not work on their businesses.

It’s human nature to spend more time doing what you enjoy and what you do best.

So self-employed small business owners gravitate to what they like doing, rather than mastering the business skills they lack. The result is that they spend way too much energy in their business and not on their business.

You’re running a business now, not just working. Stop being a worker and start being a director. You need to skill up and learn how to run a successful business.

2

Remember that every business is a family business

One of the nice things about working for yourself is the flexibility it gives you with regard to the hours you work. This reason alone is why lots of people head off and start their own businesses – myself included. “I’ll be able to take the kids to basketball practice,” or “I can have the whole summer off and we’ll head off camping.” Sound familiar?

As the business grows, you start working harder – before the family wakes and after they have gone to bed. You take work calls while you’re driving to basketball practice.

Your family are supportive, as they hope you are living your dream.

Father’s Day breakfast comes along, and you go to school with your children. (You can do this because you run your own business, right?) After the breakfast, you are invited to see the children’s work in their classroom.

Your eldest daughter has written a poem about Dad, and one verse goes: “Daddy – talk, talk, talk on the phone all day.”

You’ve got the message. And isn’t this the complete opposite of what you wanted when

were away, or it wouldn’t be a holiday because they would be tethered to their emails and phone calls and disengaged from their families, you’d be able to go on holiday yourself and still make money.

How do you overcome this? Systemize your business. Systemizing is the process of documenting everything you do in your business – from answering the phone and opening the mail to pricing work and after-care service.

Self-employed small business owners gravitate to what they like doing, rather than mastering the business skills they lack. The result is that they spend way too much energy in their business and not on their business you started your own business? You have been isolating yourself and not engaging with your family. Before you know it, you’re not running a business – the business is running you.

Business can destroy your family life and your family. You might be happy working 24/7, but they won’t be. Every business is a family business – but it is only a business and not your entire life. A business can have a profoundly negative impact on your life if you let it. It can also serve you and your family well as long as you start working more on the strategy and less on the tactical aspects of your business.

If you have a family and you work for yourself, then you have a family business – so you must be fair to your family and make time for them away from your business.

3

Systemize your business

If you had a dollar for every time you’ve heard people say they were either too busy to have a holiday, or they couldn’t leave their business to others to run while they

Without systems and processes in place, your business will become all-absorbing, with endless tasks to complete.

Systems and processes allow others to share the load. These people then become what a studio recording is to Taylor Swift. A Taylor Swift song can be played by millions of people all at the same time. It sounds the same every time it is played, and Taylor Swift collects a royalty every time the recording is played. Create a recording – a system – of your business, your talents, your way of doing something, and then, like a song, replicate it, market it, distribute it and manage the revenue.

Stephen Barnes is the principal of management consultancy Byronvale Advisors. He has spent more than 20 years advising clients, from new business startups to publicly listed companies, across a wide array of industries. He is also the author of Run Your Business Better: Essential Information Every Business Owner Should Know and Use. To find out more, visit byronvaleadvisors.com.

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16/03/2018 1:51:26 AM

FEATURES

MEETINGS

Say no to dull meetings Business strategist Matt Malouf explains how getting the rhythm and subject of your meetings right can turn tedious encounters into business turning points THE KEY to great management, whether your staff members are local or overseas, virtual or in your workplace, is regular communication and a good meeting rhythm. Think of meetings as the pulse of your business: If it’s not beating regularly and rhythmically, then inevitably you’ll get an unhealthy system.

In the 15 years I’ve spent working in or with growing companies, the companies that are consistently growing and achieving their goals are those that have established a routine and rhythm of having meetings. The faster they are growing, the more meetings they have. While this may sound counterintuitive or even crazy, I need to clarify that I’m not talking about having a meeting for the sake of having a meeting. I’m talking about having short meetings that are run to time, with a specific structure and agenda.

Most meetings are poorly run, demotivating and, to be frank, a waste of everyone’s time. If run properly, your meetings will be inspiring and positive and enable the business to grow at a faster rate.

A big key to running successful meetings is to prepare for them properly. This is why daily, weekly and monthly reports are so important.

The reports are designed to give you the information required to run a short and productive meeting. This way, the meeting can cut through the information-gathering stage that often takes up the majority of most meetings

60

and get straight into constructive discussions and/or sharing.

A great meeting rhythm I have implemented with many companies is a daily meeting (sometimes referred to as a daily huddle), a weekly meeting and a monthly meeting.

Daily meeting or huddle – a must in growing companies A daily meeting or huddle is a short meeting (five to 15 minutes) designed to support discussions around tactical issues and provide short updates. This is a great way to bring everyone together, keep everyone focused, and build a culture of camaraderie and teamwork.

While this may seem like overkill, this is a

mented well, the daily huddle will save you time, reduce impromptu conversations and increase the efficiency of information-sharing.

I have worked with many organizations that have implemented this well, and the results are immediate. Your team will be more aligned, and you will be able to control the internal energy while accelerating the growth

I’m not talking about having a meeting for the sake of having a meeting. I’m talking about having short meetings that are run to time, with a specific structure and agenda practice that many fast-growing companies around the world have implemented and are practicing on a daily basis. You may feel like you don’t have the time to conduct such a meeting or that you are having enough interactions already, so you don’t need another meeting. In my experience, when imple-

of your company. Let me delve a little deeper into the structure and limits that lead to a successful daily huddle.

Timing It is recommended that you set the start of the daily huddle at an odd time, such as 10:10 a.m.

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with less people.” It is for that reason that I recommend you involve the maximum number of staff members. The ideal number to keep the meeting short and allow a good exchange of information is 10 to 20 people. In larger companies, I would recommend you create a daily huddle in each department and another daily huddle with the heads of departments.

Agenda The last point to consider is the heart of the daily huddle: the questions. The agenda should be the same every day – only three items long (allowing up to five minutes per item). An agenda that has worked with many of my clients revolves around the following three questions: Did you achieve your primary focus yesterday?

What is your primary focus today?

What obstacles will keep you from completing it?/Where are you stuck?

or 12:12 p.m., to make it memorable. Starting at an odd time often leads to people being on time, believe it or not. As this is quite a short meeting, you don’t have very much time to waste. So it is important to the success of the huddle that you start and finish on time.

(Ideally, the meeting shouldn’t go for longer than 15 minutes.) In the beginning, I recommend getting someone to time the meeting and to end the meeting regardless of whether the agenda is finished or not.

Setting In order to the keep the meeting short, it is best to conduct the daily huddle standing up.

This keeps the energy high and will help you to avoid extending the conversation – people don’t want to have to stand for too long.

Participants Verne Harnish, author of Scaling Up and a leading pioneer of the daily huddle concept, says, “In general, the goal is to have more people in less meetings, not more meetings

The meeting rhythm will depend on the role and the organizational culture.

Depending on what other meetings are scheduled, I usually have a daily meeting with my personal assistant. That daily meeting is critical to her role and her ability to support me in what I’m doing. Those meetings are prebooked one month in advance.

It’s a 15-minute meeting, and the conversation starts with, “How can I help?”, and then my assistant will give all the updates for the day. The meeting shifts when she says, “Matt, how can I help you?”, and then I update her on what I need done. While hosting this meeting, we use Asana, our project management tool. We both have it open and make changes in real time so we can both see the capture of those tasks and make sure they get managed properly.

Weekly and monthly meetings The second meeting type is the weekly meeting, which is a 50-minute meeting with a clear agenda that talks about the critical progress updates within a business. It engages

conversation to help people understand and gathers feedback from the team on what the business should keep doing, stop doing and start doing.

When it comes to one-on-one, team, weekly or any other meetings that follow an agenda, culturally it’s good to start with: What are your wins for the week, and why do they matter?

What has been your biggest challenge, and why does it matter?

What have you learned in the past week, and how can you apply it?

This helps set a positive mood and tone for the meeting, providing a chance to celebrate individual victories as a team and praise individuals in front of the team. ‘Wins and positives for the week’ could be the first item on your meeting agenda. From there, move on to the remaining items. I always end my weekly meetings with these two questions: As an organization, based on the past seven days, what should we stop doing?

As an organization, based on the past seven days, what should we start doing?

These two questions allow people to voice their concerns or frustrations, as well as provide ideas or solutions that can enhance the business.

Monthly meetings follow a similar agenda to the weekly meetings, except you need to add a strategic layer to them. By this I mean you should check in with the company’s goals and solve any major challenges to enable you to continue moving forward.

Edited excerpt from The Stop Doing List (Wiley, $27.95) by Matt Malouf Matt Malouf is a business strategist and the author of The Stop Doing List, which draws on Malouf’s work with big businesses and startups to help business owners free up time to build their businesses. The Stop Doing List is available in bookshops and online.

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PEOPLE

CAREER PATH

MAGAZINES

SPECIAL REPORTS

ARTICLES

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PEOPLE

CAREER PATH

NATURAL INTEGRATOR Josh Ladeau has come a long way to merge his two greatest loves: insurance and technology

Computers and technology found a permanent place in Ladeau’s heart when the self-described “geeky” youngster started going online well ahead of the internet boom, accessing bulletin board systems via a dial-up modem “It compelled an early interest in technology that resurfaced as I got older”

1990 GEEKS OUT

2008 BLENDS INSURANCE AND TECH Finding himself unchallenged by consumer finance, Ladeau discovered a way to capitalize on his skills by specializing in privacy and network security insurance at Darwin Professional Underwriters

“I quickly understood that security professionals thought about and talked about this space much differently than underwriters. My long-repressed inner geek was awakened ... I saw an opportunity to materially differentiate myself from peers” 2015 DESIGNS A WINNER Understanding the minds of security professionals enhanced Ladeau’s underwriting skills; he attributes his success at Allied World to this direct engagement “The development of Allied World’s FrameWRX risk management platform generated a client uptake rate of approximately 20% when most of the industry was experiencing less than 1% usage rates”

2017 DELIGHTS HIS INNER GEEK On the heels of Apex’s success, Aspen named Ladeau its global cyber head “I was delighted by the way in which our distribution partners embraced Apex, and feedback has been extremely positive. Last year, I was named to the NetDiligence Conference Advisory Council, and more recently, I was appointed Aspen’s global cyber head – two highlights in my career.

I guess that’s my inner geek at its peak!”

1997 JOINS THE MARINES In search of structure and compelled by a desire to push himself both mentally and physically, Ladeau joined the Marines. He credits his enlistment with helping to eliminate his fear of the unknown “When I left the Marines, I really didn’t know what I wanted to do. I explored various industries and struggled at times before settling into loan origination and underwriting, but the Marines instilled confidence that I could overcome any obstacle”

2014 PASSES THE TEST Ladeau’s self-directed learning and use of on-the-job opportunities to enhance his knowledge culminated in his passing the Certified Information & Systems Security Professional [CISSP] exam, making him the first insurance professional globally to hold the designation “The process enhanced my ability to underwrite risk and fundamentally changed my approach to the business. I was the practice lead for cyber liability at Allied World, where I retooled their approach, emphasizing embedded incident response through a new suite of products”

2016 REACHES THE APEX When Aspen Insurance launched a dedicated US cyber practice, the company hired Ladeau to develop Apex, a product he considers to be at the vanguard of cyber policy design “Our model centers on thoughtful risk selection and is supported by Apex, a 7.5-page cutting-edge form that is a fraction of the size of competing policies. Apex was a key factor in our ability to gain traction rapidly in a crowded and highly competitive environment”

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email iba@keymedia.com

Guttma n has spent more tha n 15 years singing at weddings

150

Number of wedding gigs Guttman has performed

1,500–2,000 Estimated number of songs in Guttman’s repertoire

40

Typical number of songs Guttman sings per wedding

SINGING HIS HEART OUT There’s nothing Ben Guttman would rather do than inspire wedding guests to get out on the dance floor AT THE tender age of 3, Baltimore-based insurance advisor Ben Guttman entertained those around him by “wandering around singing songs”; in his teens, Guttman pursued his love of music by singing in a choir, playing in the school band and performing with an acapella group, as well as leading services at his synagogue.

But it was his first real gig at age 16 – a wedding ceremony where he performed for free as a favor to the bride’s brother – that really instilled Guttman with a love of performing. “I was thrilled to be up on stage – and still am when I’m up there,” he says.

In the years since, Guttman has main-

tained a sideline as a wedding singer. It’s a job that can wreak havoc on his social life at times, as wedding season sometimes results in him performing at six weddings a month. But for Guttman, the good vibes make it more than worthwhile. “Weddings have a great atmosphere,” he says.

“Everyone’s happy; everyone’s into it.”

Photo by Uri Anson

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